Final Results

 

TIDMDIGI 
 
RNS Number : 6966O 
Digital Marketing Group PLC 
02 July 2010 
 

Date:               2 July 2010 
On behalf of:   Digital Marketing Group plc ("DMG", "the Company" or "the 
Group") 
Embargoed:   0700hrs July 2nd 2010 
 
 
                          Digital Marketing Group plc 
                            Preliminary Results 2010 
 
Digital Marketing Group plc (AIM: DIGI), the UK's largest digital marketing 
specialists, today announced its preliminary results for the year ended 31 March 
2010. 
 
Performance Highlights 
 
·     Revenues GBP48.5m (2009: GBP56.7m) 
 
·     Gross profit GBP35.5m (2009: GBP41.6m) 
 
·     EBITDA (before share based payment charges) GBP8.3m (2009: GBP9.3m) 
 
·     Profit before tax, impairment, share based payment charges and 
amortisation GBP7.2m (2009: GBP8.0m) 
 
·     Adjusted basic EPS 8.77p (2009:8.76p) 
 
·     Net cash flow generated from operations GBP4.8m (2009: GBP8.4m) 
 
·     Net debt GBP7.3m (2009: GBP5.9m) 
 
·     Completion of acquisition of award winning agency 20:20 London 
 
·     Recognised as the UK's biggest digital marketing agency for the second 
year running (Campaign Magazine January 2010) 
 
·     Consolidated the business into two pillars, 20:20 and DMG, down from nine 
separate units 
 
·     Exceptional performance from eCommerce division +52% yr/yr at GBP1.57m PBT 
 
·     Statutory loss before tax of GBP1.4m as a result of amortisation, charges 
for share based payments and impairment of intangibles and goodwill (2009: 
profit GBP3.1m) 
 
 
Commenting on the results, Stephen Davidson, Chairman of Digital Marketing Group 
plc, said: "In what continues to be the most challenging economic environment 
for business and our industry in particular I am pleased to report that your 
company has produced another robust performance, consistent with market 
forecasts. We have consolidated the business into two pillars; 20:20 and DMG. We 
are also pleased that our business is growing in areas where revenues are 
visible and recurring such as Digital Technology and eCommerce. We believe that 
our balanced portfolio of data, marketing and technology expertise represents 
the future of our industry." 
 
 
Ben Langdon, Chief Executive, added: "Coming off the back of a global economic 
recession and an extremely strong year in 08/09 when the company grew EBITDA by 
18% on a pro forma basis, we're very pleased with these results. Despite our 
significantly undervalued stock we continue to believe that the shift in 
spending in favour of online and mobile channels and away from traditional media 
remains part of a favourable long term trend. Our position as the UK market 
leader means we are well placed to take advantage of the upturn in spend on 
consumer marketing. Our business is moving towards an increased emphasis on 
eCommerce, Technology and integrated multi-channel selling. We believe that the 
market should recognise this re-balancing of our company's proposition and 
enable us to benefit from the valuation levels enjoyed by businesses less 
digitally and technologically skilled than ours." 
 
 
Enquiries: 
 
+--------------------------------------+---------------------------------+ 
| Digital Marketing Group plc          | www.digitalmarketinggroup.co.uk | 
+--------------------------------------+---------------------------------+ 
| Ben Langdon, Chief Executive         | via Eulogy!                     | 
+--------------------------------------+---------------------------------+ 
|                                      |                                 | 
+--------------------------------------+---------------------------------+ 
| Eulogy!                              | www.eulogy.co.uk                | 
+--------------------------------------+---------------------------------+ 
| Adrian Brady, Chief Executive        | Tel: [phone]              | 
+--------------------------------------+---------------------------------+ 
|                                      |                                 | 
+--------------------------------------+---------------------------------+ 
| Cenkos Securities                    |                                 | 
+--------------------------------------+---------------------------------+ 
| Ivonne Cantu/Julian Morse            | Tel: [phone]              | 
+--------------------------------------+---------------------------------+ 
 
Notes to Editors: 
 
*  Digital Marketing Group (AIM: DIGI) listed on AIM in October 2006, employs 
over 500 people. 
*  Digital Marketing Group is the UK's biggest digital marketing agency 
(Campaign Magazine Jan 2010). 
*  At the heart of the company is Digital Brain - a process which integrates 
digital marketing, technology and data. 
 
Digital Marketing Group's future development strategy consists of three key 
elements: 
 
 
·     Continued migration towards scalable services, with visible and recurring 
revenues 
·     Increased emphasis on eCommerce and Technology 
·     Continued consolidation of the business into one fully integrated 
operating unit. 
 
 
 
Chairman's statement 
 
In what continues to be the most challenging economic environment for business 
and our industry in particular I am pleased to report that your company has 
produced another robust performance, which was consistent with market forecasts. 
Earnings before interest, tax, depreciation, amortisation and share based 
payments was GBP8.3million for the year ended 31 March 2010 against 
GBP9.3million for the previous year.The total adjustment is a charge of GBP6.0 
million (2009: GBP6.2 million). The adjusted profit before tax was GBP7.2 
million compared to GBP8.0 million in 2009. 
 
A review of the carrying value of our intangible assets and goodwill was carried 
out at the year end and using a conservative weighted average cost of capital of 
12.9% the Board has decided to impair the carrying value by GBP3.8million.The 
reported loss before tax for the year of GBP1.4 million (2009: profit GBP3.1 
million) is therefore explained by share based payment charges of GBP2.9 million 
(2009: GBP3.0 million), amortisation of GBP1.9 million (2009: GBP1.9 million) 
and an impairment charge against the carrying value of intangibles and goodwill 
of GBP3.8 million (2009: GBPnil). 
 
We have consolidated the business into two pillars; 20:20 and DMG. This 
reorganisation has been received well by the industry and clients alike and we 
are benefiting from recognition as the premier player in the UK digital 
marketing industry. This increase in profile has led to a corresponding increase 
in the level of invitations to pitch for projects and has improved our new 
business pipeline significantly year on year. The year has started well with our 
business operating in line with management budgets. 
 
We are also pleased that our business is growing in areas where revenues are 
visible and recurring. Our Technology and eCommerce business had an exceptional 
year with its results up 52%. We believe that our balanced portfolio of data, 
marketing and technology expertise represents the future of our industry. 
 
Our cost base continues to be controlled and we aim to ensure it is appropriate 
to the revenues we are generating. During the year we have reduced our salary 
bill by GBP2.5 million or 9.3%. 
 
In December 2009 we acquired the award winning 20:20 agency based in London. 
This agency has won great acclaim in the industry for its innovative use of 
digital and mobile platforms in the launch of new products and engagement 
programmes. We have now branded our existing digital agencies under the 20:20 
banner and continue to integrate the businesses into a single unit for the 
advantage of clients and employees. 
 
As a result of this small scale acquisition we have increased our debt at year 
end to GBP7.3 million. We still have GBP3.9 million of headroom in our banking 
facilities of GBP11.2 million. 
 
In a tough economic environment it is not surprising that our business has had 
both highs and lows.  A big part of our data services business is focused on the 
financial services sector and has been severely impacted through the wider 
downturn with gross profit down 46.0%. We have also disclosed GBP1.7 million as 
other income which was received during the year from the administrator of a 
client with whom the Group had a contractual obligation. 
 
I would like to thank management and employees who have worked tirelessly 
through the year to produce these results in what has been a very testing 
environment. It is extremely frustrating that all the hard work and success 
produced by all the management and employees is not reflected in the current 
share price. The members of the Board are all shareholders and are concerned the 
market does not rate the Company more highly and reflect the inherent value in 
the business. Once positive market sentiment returns to the sector we believe 
the Company will command the rating it merits. 
 
I am extremely sad to report that Mike Ferguson, a director in our eCommerce 
business, died suddenly in May 2010 at the age of 56. Mike was part of the team 
at CyberDMG that transformed the business into the success it continues to be. 
Our sympathies are with his wife Ann and their children. 
 
Stephen Davidson 
Chairman 
1 July 2010 
Chief Executive's Review 
 
Business review 
 
Digital Marketing Group plc achieved an EBITDA before share based payment 
charges of GBP8.3m in 2009/10. The total adjustment is a charge of GBP6.0 
million (2009: GBP6.2 million). Although this is a decline of GBP1m year on year 
it represents an extremely robust performance given the worst economic 
environment for generations and comes off the back of a very strong year in 
2008/09 when the Company grew EBITDA by 18% year on year on a pro forma basis. 
 
Unlike some of our competitors, we are a business with a broad spread of digital 
marketing expertise and are not reliant on one particular discipline for our 
revenues. We have , for example, been able to withstand the decline in the 
financial services sector and its inevitable impact on our data services 
business, precisely because we also have strong digital agencies, and an even 
stronger eCommerce division. 
 
Unsurprisingly, in 2009/10 many of our clients undertook significant budget cuts 
and decision-making became painfully slow. Despite the inexorable shift of media 
budgets away from traditional channels in favour of digital and mobile, some 
elements of marketing spend through these channels were also hit through 
recession. 
 
Nevertheless, our digital businesses proved extremely competitive, particularly 
those where our products and services helped clients become more cost effective 
and efficient. 
For example, our eCommerce and technology business, 20:20 Technology (formerly 
CyberDMG) grew 51.7% year on year in 2009/10 to achieve PBT of GBP1.57m 
(GBP1.03m 2008/9). 
This business, based as it is on expert knowledge of digital technology, is 
fundamentally scalable. It helps our clients lessen their reliance on 'bricks 
and mortar' retail chains and enables them to sell products more cost 
effectively online.  This business has been relatively recession proof and is 
continuing to exceed our expectations.  20:20 Technology at the gross profit 
line now represents 17.9% of our total business, and we anticipate it will 
become at least 25% within 2 to 3 years. 
We also envisage an increased emphasis on digital technologies in our 
proposition to clients and prospects. In time our business will become a better 
balance of technology, marketing and data analytics skills.  Our ownership and 
understanding of digital technology helps us sell the multi-channel marketing 
service we call Digital Brain, but perhaps more importantly it also generates 
revenues that are visible and recurring. 
 
Our commitment to digital technology as a means of helping us achieve 
sustainable organic growth also extends to other areas of our business. As 
consumers and businesses increasingly expect a personal and tailored service 
from brands, software and analytics will increasingly fill the void left by 
downsized marketing departments. In this environment, excellent, decision-based, 
action-oriented analytics will drive competitive advantage. As part of our 
Digital Brain platform, we launched Digital Brain:Search in July 2009. It is now 
a world-class search marketing management and analytics suite using business 
intelligence software.  It combines a best-in-class analytics package and our 
own exceptionally complex mathematical models. 
 
There are four modules within DigitalBrain:Search: 
 
·      Reporter:  turnkey, integrated automated reporting from all the major 
search engines and advertising tracking providers in one intuitive web-based 
dashboard. The model is easily extended to include other non-search data 
sources, such as customer data and site analytics. 
 
·      Glossary: an automated keyword and match type management recommendation 
engine which extends the number of keywords available to be purchased and so 
cuts cost per acquisition. 
 
·      Optimiser: identifies keywords that contribute to a sale, but are not 
actually clicked on.  It provides automated bid price recommendations for 
keywords, which drives significant cost savings or performance enhancements. 
 
·      Forecaster: 'What if' analysis using real-time search, spend, inventory 
and sales data. 
 
Digital Brain:Search is now used extensively by 20:20 Media & Analytics on all 
its new clients and is being adopted by all of the Group's search marketing 
clients. 
 
 
Our digital agency network has also proved remarkably resilient in a difficult 
economic environment. The companies previously trading as DigforFireDMG, 
InboxDMG and GraphicoDMG all declined slightly year on year, but made combined 
operating profit before tax and share based payments of GBP3.4 million versus 
GBP3.7 million in the previous year. This underlying strength of performance 
should give our shareholders real confidence for the future particularly when 
client confidence and marketing spend recovers, as it inevitably will in time. 
 
As mentioned above, the only significant area of weakness in our business 
occurred in our data services business where the economic crisis had a 
significant impact on its financial services clients and contributed to a 
substantial fall in overall revenues. None of the major financial services 
brands undertook substantial initiatives in the data services area in 2009/10 
and falling applications for personal borrowing have impacted product revenues. 
Marketing spend has also reduced across the board in the financial services 
sector, given lower customer acquisition targets. Consolidation and 
restructuring of clients in the Banking sector also reduced opportunities to 
counter these factors through new business growth. Many of our clients spent the 
financial year 2009/10 focused on internal reorganisation and as a consequence 
data sales slumped across the industry. Our major competitors in this sector 
also reported significant declines in annual revenues in the UK in 2010 citing 
challenging market conditions created by restrained capital expenditure in the 
financial services sector.  In addition, JaywingDMG's new product developments 
have taken longer to gain traction in a climate of budget reductions resulting 
in delays to expected new product revenues.The effect of the economic downturn 
in this sector resulted in gross profit at JaywingDMG falling by 46% down from 
GBP12.9 million to GBP7.0 million. 
 
During the year we decided to consolidate our business further and reduced our 
nine operating units down to two pillars.The business unit has now been 
integrated along with GasboxDMG and DigforFire into one pillar business ('DMG'). 
The DMG pillar will specialise in multi-channel marketing, a process we term 
Digital Brain. The integration of three businesses into this pillar has enabled 
us to eliminate duplicative management resource, and  will improve the cross 
selling of Digital Brain solutions which will in turn result in increased 
success for all three  businesses. This DMG pillar now represented 54% of our 
total Gross Profits in 2009/10 versus 61% in 2008/09. 
Our digital businesses have also been consolidated into one pillar ('20:20') and 
this now represents 46% of our total gross profits, versus 39% in 2008/09. 
20:20 now trades as one entity www.weare2020.com, is led out of our newly 
acquired business in London, and has recently promoted and hired significant new 
talent reflecting both the vibrancy of our offering and the confidence the Board 
has in its future.  We now have a new generation of dynamic leaders in 20:20 who 
are fully committed to the future growth of the company and are working hard 
within our organisation to build shareholder value. 
 
 
 
 
 
 
The segmental performance of our business, now shown in two pillars (20:20 and 
DMG) is shown below. The 20:20 pillar includes operating units previously known 
as InboxDMG, HyperlaunchDMG, GraphicoDMG, CyberDMG, CheezeDMG, and 20:20 London. 
The DMG pillar includes DigforFireDMG, JaywingDMG and GasboxDMG. 
 
 
Segmental performance 
 
+-----------------------+----------+----------+-------------+----------+ 
| For the year ended 31 |          |          |             |          | 
| March 2010            |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
|                       |    20:20 |      DMG | Unallocated |    Total | 
+-----------------------+----------+----------+-------------+----------+ 
|                       |  GBP'000 |  GBP'000 |     GBP'000 |  GBP'000 | 
+-----------------------+----------+----------+-------------+----------+ 
| Revenue from external |   27,832 |   21,322 |       (690) |   48,464 | 
| customers             |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Direct costs          | (11,382) |  (2,160) |         538 | (13,004) | 
+-----------------------+----------+----------+-------------+----------+ 
| Gross profit          |   16,450 |   19,162 |       (152) |   35,460 | 
+-----------------------+----------+----------+-------------+----------+ 
| Other operating       |        7 |    1,702 |           - |    1,709 | 
| income                |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Operating expenses    | (12,572) | (15,511) |       (739) | (28,822) | 
| excluding             |          |          |             |          | 
| depreciation,         |          |          |             |          | 
| amortisation and      |          |          |             |          | 
| charges for share     |          |          |             |          | 
| based payments        |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Operating profit      |    3,885 |    5,353 |       (891) |    8,347 | 
| before depreciation,  |          |          |             |          | 
| amortisation and      |          |          |             |          | 
| charges for share     |          |          |             |          | 
| based payments        |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
 
 
 
+-----------------------+----------+----------+-------------+----------+ 
| For the year ended 31 |          |          |             |          | 
| March 2009            |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
|                       |    20:20 |      DMG | Unallocated |    Total | 
+-----------------------+----------+----------+-------------+----------+ 
|                       |  GBP'000 |  GBP'000 |     GBP'000 |  GBP'000 | 
+-----------------------+----------+----------+-------------+----------+ 
| Revenue from external |   28,229 |   30,053 |     (1,628) |   56,654 | 
| customers             |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Direct costs          | (12,194) |  (4,535) |       1,628 | (15,101) | 
+-----------------------+----------+----------+-------------+----------+ 
| Gross profit          |   16,035 |   25,518 |           - |   41,553 | 
+-----------------------+----------+----------+-------------+----------+ 
| Other operating       |      192 |        - |           - |      192 | 
| income                |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Operating expenses    | (11,984) | (18,899) |     (1,574) | (32,457) | 
| excluding             |          |          |             |          | 
| depreciation,         |          |          |             |          | 
| amortisation and      |          |          |             |          | 
| charges for share     |          |          |             |          | 
| based payments        |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Operating profit      |    4,243 |    6,619 |             |          | 
| before depreciation,  |          |          |     (1,574) |    9,288 | 
| amortisation and      |          |          |             |          | 
| charges for share     |          |          |             |          | 
| based payments        |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
 
 
 
Liquidity review 
 
The Group has GBP11.2 million of banking facilities and at 31 March 2010 had 
available GBP3.9 million of undrawn facilities. The Group's facilities mature in 
October 2011 and it is the Group's intention to begin the process of renewal of 
these facilities before the end of this financial year. 
 
During the year the Group purchased 20:20 London for GBP2.0 million which was 
financed out of the Group's existing facilities. Full details of the acquisition 
are given in note 6. We also settled GBP600,000 of deferred consideration for 
the acquisition of CyberDMG Limited. 
 
The consolidated cash flow statement shows the Group to have generated cash from 
operating activities of GBP4.8 million (2009: GBP8.4 million). 
 
We paid GBP2.4 million in tax (2009: GBP2.2 million) which is up on the previous 
year because of timing issues and certain Group companies moving to a quarterly 
payment on account basis. In addition, we repaid GBP1.8 million of borrowings 
(2009: GBP2.3 million). 
As at 31 March 2010, the Group had net debt of GBP7.3 million. 
 
Impairment 
 
As required by IAS 38 we have carried out an impairment review of the carrying 
value of our intangible assets and goodwill. We calculate our weighted average 
cost of capital with reference to long term market costs of debt and equity and 
the Company's own cost of debt and equity, adjusted for the size of the business 
and risk premiums. Based on this calculation the rate of 12.9% has been derived. 
This is applied to cash flows for each of the business units using growth rates 
in perpetuity of 2% from 2017. As a result of these calculations the Board have 
reviewed the carrying value of intangible assets and goodwill on the Group's 
balance sheet and have decided to take an impairment of GBP3.8 million (2009: 
GBPnil). 
 
Contingent payments 
 
The Group has been built through organic growth and by acquisition. The estimate 
of payments to be made for past acquisitions is GBP4.2 million (2009: GBP4.4 
million). GBP2.4 million for the purchase of CyberDMG has crystallised and is 
due for payment in July 2012, subject to the management being in the Group's 
employment at that time. GBP500,000 is due for the purchase of 20:20 London and 
is subject to performance criteria being met. The balance of GBP1.3 million will 
be determined at the end of July 2010, however based on management information 
the Board does not anticipate that this will be payable. 
 
 
Key performance indicators 
 
 
At the beginning of 2009/10 the board agreed the following KPIs for the 
business: 
 
·      Each business was to focus on balancing costs against lower levels of 
gross profits than previously anticipated. 
 
·      Increased centralisation of non client facing functions as part of our 
ongoing integration plan. 
 
·      Continued recognition as the UK's No 1 digital agency. 
 
·      Roll out the launch of Digital Brain:Search and DemographDMG. 
 
·      Creation of new routes to market through the hiring of people with 
specific skills or through selective acquisition. 
 
 
I am therefore pleased to be able to report the following: 
 
 
·      Salary costs were reduced by GBP2.5m, or 9.3% year on year. 
 
·      We have consolidated nine separate businesses into two pillars. 
 
·      We were recognised as the UK's No 1 Digital Agency for the second year in 
succession. 
 
·      Sales of Digital Brain:Search proved to be slightly slower than 
anticipated in 2009/10 as the lead times involved in getting clients to switch 
Pay Per Click suppliers were longer than expected, however, we won a significant 
contract from Swinton Insurance.  The appointment of new leadership within the 
business unit formerly known as CheezeDMG and its relaunch as 20:20 
Media&Analytics focused on sales of Digital Brain:Search will, we believe, aid 
new business and also help the unit recover from the loss of the Holiday 
Cottages Group account. 
 
·      From its launch in July 2009 DemographDMG has developed a strong client 
base and has an emerging reputation in the digital research sector. DemographDMG 
has undertaken large scale projects for a range of blue chip clients including 
HSBC and Carphone Warehouse. We now have a strong cross sector client base and 
are already seeing repeat business from many clients we have worked with. 
 
Our digital research specialism has meant that the bulk of our revenue has come 
from this emerging sector and DemographDMG is developing specialisms in website 
usability testing, online research, technology insight and social media 
research.  An aggressive new business push in these emerging markets is leading 
to an accelerated growth in these areas and a healthy new business pipeline for 
2010/11. 
 
·      The acquisition of 20:20 London gives us access to new clients in new 
areas, particularly mobile marketing. The hiring of new management within our 
Bristol office, will make our business much more successful in social media and 
online PR. 
 
 
 
In 2010/11 as we slowly emerge from recession, the KPIs will be: 
 
 
·      Recovery in our data services division within the DMG pillar. 
 
·      Winning of blue chip digital accounts through the new 20:20 pillar. 
 
·      Increased sales of Digital Brain: Search as well as more profitable 
social media marketing assignments. 
 
·      Emergence of 20:20 Mobile as a significant revenue generator, focused on 
applications, mobile content, games and commerce. 
 
 
 
Outlook 
 
Current market conditions appear to be improving slowly and we expect the 
recovery to be modest and more pronounced in 2011/12 than in 2010/11. 
 
Group M recently forecast a 4.2% growth in media spend in the UK in 2010. 
Publicis recently forecast organic growth of 3.0% this year, whilst Aegis also 
forecast UK adspend to grow at 2.9% in 2010. 
 
We anticipate our 20:20 digital business will exceed these levels of growth, and 
are expected to be similar to the 10.0% levels forecast by Aegis for digital 
media. 
 
The creation of the 20:20 pillar is already impacting on our new business 
performance with wins across the digital marketing spectrum. We have recently 
won significant eCommerce contracts and are looking to expand our 20:20 
Technology business in London and India. We have won design and build projects 
for Quinn Direct and Sealife and digital campaigns for DVLA and Defra. Our new 
20:20 mobile business is already engaged on iPhone applications for brands as 
diverse as Hula Hoops and Bounty. Recent 20:20 social media wins include 
Airmiles, Nivea and Warburtons. We have also recently won viral campaigns/games 
for William Hill and Freesat and won new work from existing blue chip clients 
such as the Mountain Dew UK launch and V Water campaigns for PepsiCo. 
 
Recovery in our DMG pillar and in particular our data services division is 
however linked to the speed of recovery in the financial services sector. 
Experian recently forecast 'gradual recovery' and our sentiment is the same. 
Our data services business is expected to improve slowly this year following the 
re-focusing of the company's lead generation effort which took place in the 
second half of 2009/10. Revenues from 'marketing' propositions in our data 
service division have now increased to former levels and mirror a corresponding 
rise in our data services sales pipeline (adjusted 3 months). Financial Services 
lending activity is slowly on the increase. There are also new entrants in the 
banking sector (Virgin Money, MetroBank, Walton&Co, Tesco) coupled with interest 
from Private Equity investment in the banking sector. All of this should help 
our data services business recover. Strategically, the increased use of online 
channels has flooded clients across all business sectors with data they find 
difficult to turn into actionable insight. However, KPIs on these channels are 
worsening with cost per sale figures rising quite rapidly.  The key to this 
problem is multi-channel optimisation to achieve optimal customer recruitment 
and acquisition levels. DMG is the best placed business in the UK to handle 
clients with multi-channel marketing requirements and will benefit when clients 
begin to re-invest. 
 
 
 
 
Long term strategic vision 
 
 
·      Despite our under-performing and significantly undervalued stock we 
continue to believe that the shift in spending in favour of online and mobile 
channels and away from traditional media remains part of a favourable long term 
trend. Our position as the UK market leader means we are well placed to take 
advantage of the upturn in spend on consumer marketing. 
 
·      Our focus as a business has however had to change as a result of the 
recession and its impact on the financial services business, and our data 
services company in particular. Our business will gradually move away from its 
over dependence on the financial services sector in our data services business 
and move towards an increased emphasis across the group on technology and 
integrated multi-channel selling. This multi-channel message will integrate our 
technology, marketing and data skills. 
 
·      Consistent with the theme of technology-driven integration, we remain 
committed to further integration in our own business. We now have two pillars 
where we previously had nine operating units, and we will continue to look for 
ways to consolidate further and eliminate unnecessary cost or duplication. 
 
·      We believe that a re-balancing of our business towards technology-driven 
solutions will also help us win more recurring revenues from clients as our 
services will become more 'business critical'. 
 
·      Critically, we  believe that the market should  recognise this 
re-balancing of our company's proposition and enable us to benefit from the 
valuation levels enjoyed by businesses less robust and less digitally and 
technologically skilled than ours. 
 
 
 
 
 
 
 
Ben Langdon 
Chief Executive 
1 July 2010 
 
 
 
 
 
 
Consolidated statement of comprehensive income 
 
+---------------------------+------+------------+------------+----------+----------+ 
| For the year ended 31     |      |       2010 |       2010 |     2010 |     2009 | 
| March                     |      |            |            |          |          | 
+---------------------------+------+------------+------------+----------+----------+ 
| Continuing operations     | Note |    GBP'000 |    GBP'000 |  GBP'000 |  GBP'000 | 
+---------------------------+------+------------+------------+----------+----------+ 
|                           |      |     Before |            |          |    Total | 
|                           |      | impairment | Impairment |          |          | 
|                           |      |         of |         of |          |          | 
|                           |      |   goodwill |   goodwill |          |          | 
|                           |      |        and |        and |    Total |          | 
|                           |      | intangible | intangible |          |          | 
|                           |      |     assets |     assets |          |          | 
+---------------------------+------+------------+------------+----------+----------+ 
|                           |      |            |            |          |          | 
+---------------------------+------+------------+------------+----------+----------+ 
| Revenue                   |    1 |     48,464 |          - |   48,464 |   56,654 | 
+---------------------------+------+------------+------------+----------+----------+ 
| Direct costs              |      |   (13,004) |          - | (13,004) | (15,101) | 
+---------------------------+------+------------+------------+----------+----------+ 
| Gross profit              |      |     35,460 |          - |   35,460 |   41,553 | 
+---------------------------+------+------------+------------+----------+----------+ 
|                           |      |            |            |          |          | 
+---------------------------+------+------------+------------+----------+----------+ 
| Other operating income    |    2 |      1,709 |          - |    1,709 |      192 | 
+---------------------------+------+------------+------------+----------+----------+ 
| Amortisation              |      |    (1,938) |          - |  (1,938) |  (1,863) | 
+---------------------------+------+------------+------------+----------+----------+ 
| Operating expenses        |    3 |   (32,321) |    (3,787) | (36,108) | (36,161) | 
+---------------------------+------+------------+------------+----------+----------+ 
| Operating (loss)/profit   |      |      2,910 |    (3,787) |    (877) |    3,721 | 
+---------------------------+------+------------+------------+----------+----------+ 
| Finance income            |      |          2 |            |        2 |       97 | 
|                           |      |            |          - |          |          | 
+---------------------------+------+------------+------------+----------+----------+ 
| Finance costs             |      |      (534) |            |    (534) |    (704) | 
|                           |      |            |          - |          |          | 
+---------------------------+------+------------+------------+----------+----------+ 
| Net financing costs       |      |      (532) |          - |    (532) |    (607) | 
+---------------------------+------+------------+------------+----------+----------+ 
| (Loss)/profit before tax  |      |      2,378 |    (3,787) |  (1,409) |    3,114 | 
+---------------------------+------+------------+------------+----------+----------+ 
| Tax expense               |    4 |      (576) |          - |    (576) |  (1,674) | 
+---------------------------+------+------------+------------+----------+----------+ 
| (Loss)/profit for the     |      |      1,802 |            |          |    1,440 | 
| year attributable to      |      |            |    (3,787) |  (1,985) |          | 
| equity holders of the     |      |            |            |          |          | 
| parent                    |      |            |            |          |          | 
+---------------------------+------+------------+------------+----------+----------+ 
|                           |      |            |            |          |          | 
+---------------------------+------+------------+------------+----------+----------+ 
| Other comprehensive       |      |            |            |          |          | 
| income:                   |      |            |            |          |          | 
+---------------------------+------+------------+------------+----------+----------+ 
| Cash flow hedging         |      |            |            |          |          | 
+---------------------------+------+------------+------------+----------+----------+ 
| Current year gains        |      |         65 |          - |       65 |    (286) | 
+---------------------------+------+------------+------------+----------+----------+ 
| Total comprehensive       |      |      1,867 |    (3,787) |  (1,920) |    1,154 | 
| income for the period     |      |            |            |          |          | 
| attributable to equity    |      |            |            |          |          | 
| holders of the parent     |      |            |            |          |          | 
+---------------------------+------+------------+------------+----------+----------+ 
|                           |      |            |            |          |          | 
+---------------------------+------+------------+------------+----------+----------+ 
|                           |      |            |            |          |          | 
+---------------------------+------+------------+------------+----------+----------+ 
|                           |      |            |            |          |          | 
+---------------------------+------+------------+------------+----------+----------+ 
| Earnings per share        |    5 |            |            |          |          | 
+---------------------------+------+------------+------------+----------+----------+ 
| From continuing           |      |            |            |          |          | 
| operations                |      |            |            |          |          | 
+---------------------------+------+------------+------------+----------+----------+ 
|  - basic                  |      |      2.61p |          - |  (2.88)p |    2.15p | 
+---------------------------+------+------------+------------+----------+----------+ 
|  - diluted                |      |      2.37p |          - |  (2.88)p |    1.92p | 
+---------------------------+------+------------+------------+----------+----------+ 
 
 
 
 
 
 
 
+-----------------------------+------+---------+----------+---------+---------+ 
| Consolidated balance sheet  |      |         |          |         |         | 
+-----------------------------+------+---------+----------+---------+---------+ 
| As at 31 March              |      |         |     2010 |    2009 |    2008 | 
+-----------------------------+------+---------+----------+---------+---------+ 
|                             | Note |         |  GBP'000 | GBP'000 | GBP'000 | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Non-current assets          |      |         |          |         |         | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Property, plant and         |    7 |         |    1,752 |   2,057 |   2,215 | 
| equipment                   |      |         |          |         |         | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Goodwill                    |    8 |         |   45,653 |  47,051 |  39,449 | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Other intangible assets     |    9 |         |   14,272 |  16,116 |  13,324 | 
+-----------------------------+------+---------+----------+---------+---------+ 
|                             |      |         |   61,677 |  65,224 |  54,988 | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Current assets              |      |         |          |         |         | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Inventories                 |      |         |      212 |     196 |     790 | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Trade and other receivables |      |         |   11,832 |  10,683 |   9,582 | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Cash and cash equivalents   |      |         |    7,399 |  12,227 |  12,004 | 
+-----------------------------+------+---------+----------+---------+---------+ 
|                             |      |         |   19,443 |  23,106 |  22,376 | 
+-----------------------------+------+---------+----------+---------+---------+ 
|                             |      |         |          |         |         | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Total assets                |      |         |   81,120 |  88,330 |  77,364 | 
+-----------------------------+------+---------+----------+---------+---------+ 
|                             |      |         |          |         |         | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Current liabilities         |      |         |          |         |         | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Bank overdraft              |   10 |         |    6,443 |   8,806 |   6,901 | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Other interest-bearing      |   10 |         |    1,691 |   1,691 |   1,122 | 
| loans and borrowings        |      |         |          |         |         | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Financial derivatives       |      |         |      416 |     481 |     195 | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Trade and other payables    |      |         |   12,741 |  15,678 |  17,168 | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Current tax liabilities     |      |         |      254 |   1,475 |   1,242 | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Provisions                  |      |         |      187 |     147 |     133 | 
+-----------------------------+------+---------+----------+---------+---------+ 
|                             |      |         |   21,732 |  28,278 |  26,761 | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Non-current liabilities     |      |         |          |         |         | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Other interest-bearing      |   10 |         |    6,522 |   7,612 |   3,797 | 
| loans and borrowings        |      |         |          |         |         | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Provisions                  |      |         |        - |       - |     225 | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Deferred tax liabilities    |      |         |    4,133 |   4,661 |   3,882 | 
+-----------------------------+------+---------+----------+---------+---------+ 
|                             |      |         |   10,655 |  12,273 |   7,904 | 
+-----------------------------+------+---------+----------+---------+---------+ 
|                             |      |         |          |         |         | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Total liabilities           |      |         |   32,387 |  40,551 |  34,665 | 
+-----------------------------+------+---------+----------+---------+---------+ 
|                             |      |         |          |         |         | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Net assets                  |      |         |   48,733 |  47,779 |  42,699 | 
+-----------------------------+------+---------+----------+---------+---------+ 
|                             |      |         |          |         |         | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Equity attributable to      |      |         |          |         |         | 
| owners of the parent        |      |         |          |         |         | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Share capital               |   11 |         |   34,026 |  33,689 |  32,655 | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Share premium               |      |         |    6,608 |   6,608 |   5,954 | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Hedging reserve             |      |         |    (416) |   (481) |   (195) | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Shares to be issued         |      |         |        - |       - |     536 | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Capital redemption reserve  |      |         |      125 |     125 |       - | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Share option reserve        |      |         |      419 |   5,810 |       - | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Retained earnings           |      |         |    7,971 |   2,028 |   3,749 | 
+-----------------------------+------+---------+----------+---------+---------+ 
|                             |      |         |          |         |         | 
+-----------------------------+------+---------+----------+---------+---------+ 
| Total equity                |      |         |   48,733 |  47,779 |  42,699 | 
+-----------------------------+------+---------+----------+---------+---------+ 
|                             |      |         |          |         |         | 
+-----------------------------+------+---------+----------+---------+---------+ 
 
 
 
 
 
 
 
 
Consolidated cash flow statement 
+---------------------------------------------+------+---------+----------+ 
| For the year ended 31 March                 |      |    2010 |     2009 | 
+---------------------------------------------+------+---------+----------+ 
|                                             | Note | GBP'000 |  GBP'000 | 
+---------------------------------------------+------+---------+----------+ 
|                                             |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Cash flow from operating activities         |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| (Loss)/profit after tax                     |      | (1,985) |    1,440 | 
+---------------------------------------------+------+---------+----------+ 
| Adjustments for:                            |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Depreciation, amortisation and impairment   |      |   6,299 |    2,531 | 
+---------------------------------------------+------+---------+----------+ 
| Loss on disposal of property, plant and     |      |      28 |        - | 
| equipment                                   |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Movement in provision                       |      |      40 |        - | 
+---------------------------------------------+------+---------+----------+ 
| Financial income                            |      |     (2) |     (97) | 
+---------------------------------------------+------+---------+----------+ 
| Financial expenses                          |      |     534 |      704 | 
+---------------------------------------------+------+---------+----------+ 
| Share-based payment expense                 |      |   2,874 |    2,814 | 
+---------------------------------------------+------+---------+----------+ 
| Taxation                                    |      |     576 |    1,674 | 
+---------------------------------------------+------+---------+----------+ 
|                                             |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Operating cash flow before changes in       |      |   8,364 |    9,066 | 
| working capital and provisions              |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| (Increase)/decrease in trade and other      |      | (1,034) |    1,631 | 
| receivables                                 |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| (Increase)/decrease in inventories          |      |    (16) |      594 | 
+---------------------------------------------+------+---------+----------+ 
| Decrease in trade and other payables        |      | (2,543) |  (2,929) | 
+---------------------------------------------+------+---------+----------+ 
| Cash generated from operations              |      |   4,771 |    8,362 | 
+---------------------------------------------+------+---------+----------+ 
|                                             |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Interest received                           |      |       2 |       97 | 
+---------------------------------------------+------+---------+----------+ 
| Interest paid                               |      |   (482) |    (530) | 
+---------------------------------------------+------+---------+----------+ 
| Tax paid                                    |      | (2,355) |  (2,207) | 
+---------------------------------------------+------+---------+----------+ 
| Net cash flow from operating activities     |      |   1,936 |    5,722 | 
+---------------------------------------------+------+---------+----------+ 
|                                             |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Cash flow from investing activities         |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Proceeds from sale of property, plant and   |      |       4 |        6 | 
| equipment                                   |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Acquisitions of subsidiaries, net of cash   |    6 | (1,632) |  (7,610) | 
| acquired                                    |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Payment of contingent consideration for     |      |   (600) |  (3,566) | 
| prior year acquisitions                     |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Acquisition of intangible assets            |      |   (694) |    (105) | 
+---------------------------------------------+------+---------+----------+ 
| Acquisition of property, plant and          |      |   (301) |    (283) | 
| equipment                                   |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Net cash outflow from investing activities  |      | (3,223) | (11,558) | 
+---------------------------------------------+------+---------+----------+ 
|                                             |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Cash flows from financing activities        |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Proceeds from new loan and draw down of     |      |     600 |    6,600 | 
| bank facilities                             |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Repayment of borrowings                     |      | (1,778) |  (2,268) | 
+---------------------------------------------+------+---------+----------+ 
| Payments to redeem share capital            |      |       - |    (178) | 
+---------------------------------------------+------+---------+----------+ 
| Net cash (outflow)/inflow from financing    |      | (1,178) |    4,154 | 
| activities                                  |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
|                                             |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Net decrease in cash and cash equivalents   |      | (2,465) |  (1,682) | 
+---------------------------------------------+------+---------+----------+ 
| Cash and cash equivalents at beginning of   |      |   3,421 |    5,103 | 
| year                                        |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Cash and cash equivalents at end of year    |   10 |     956 |    3,421 | 
+---------------------------------------------+------+---------+----------+ 
|                                             |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Cash and cash equivalents comprise:         |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
| Cash at bank and in hand                    |      |   7,399 |   12,227 | 
+---------------------------------------------+------+---------+----------+ 
| Bank overdrafts                             |      | (6,443) |  (8,806) | 
+---------------------------------------------+------+---------+----------+ 
| Cash and cash equivalents at end of year    |      |     956 |    3,421 | 
+---------------------------------------------+------+---------+----------+ 
|                                             |      |         |          | 
+---------------------------------------------+------+---------+----------+ 
 
 
 
 
 
 
 
Consolidated statement of changes in equity 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
|                    |         |   Share |         |  Shares |    Capital |   Share |          |            | 
|                    |   Share | premium | Hedging |   to be | redemption |  option | Retained |            | 
|                    | capital |         | reserve |  issued |    reserve | reserve | earnings |      Total | 
|                    |         |         |         |         |            |         |          | attributed | 
|                    |         |         |         |         |            |         |          |     to the | 
|                    |         |         |         |         |            |         |          |  owners of | 
|                    |         |         |         |         |            |         |          | the parent | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
|                    | GBP'000 | GBP'000 | GBP'000 | GBP'000 |    GBP'000 | GBP'000 |  GBP'000 |    GBP'000 | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
|                    |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| At 1 April 2008    |  32,655 |   5,954 |   (195) |     536 |          - |       - |    3,749 |     42,699 | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
|                    |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Allotment of 50p   |   1,159 |     667 |       - |       - |          - |       - |        - |      1,826 | 
| Ordinary shares    |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Transfer           |       - |    (13) |       - |       - |          - |       - |       13 |          - | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Credit in respect  |         |         |         |       - |            |         |    2,814 |      2,814 | 
| of share-based     |       - |       - |       - |         |          - |       - |          |            | 
| payments           |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Transfer to share  |       - |       - |       - |       - |          - |   5,810 |  (5,810) |          - | 
| option reserve     |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Share buy back     |   (125) |       - |       - |       - |          - |       - |     (53) |      (178) | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Capital redemption |       - |       - |       - |       - |        125 |       - |    (125) |          - | 
| reserve            |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Release of reserve |       - |       - |       - |   (536) |          - |       - |        - |      (536) | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Transactions with  |   1,034 |     654 |       - |   (536) |        125 |   5,810 |  (3,161) |      3,926 | 
| owners             |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
|                    |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Profit for the     |       - |       - |       - |       - |          - |       - |    1,440 |      1,440 | 
| year               |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Other              |         |         |         |         |            |         |          |            | 
| comprehensive      |         |         |         |         |            |         |          |            | 
| income:            |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Cash flow hedges   |       - |       - |   (286) |       - |          - |       - |        - |      (286) | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Total              |       - |       - |   (286) |       - |          - |       - |    1,440 |      1,154 | 
| comprehensive      |         |         |         |         |            |         |          |            | 
| income for the     |         |         |         |         |            |         |          |            | 
| year               |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
|                    |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| At 31 March 2009   |  33,689 |   6,608 |   (481) |       - |        125 |   5,810 |    2,028 |     47,779 | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
|                    |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Allotment of 5p    |     337 |       - |       - |       - |          - |   (337) |        - |          - | 
| Ordinary shares    |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Credit in respect  |       - |       - |       - |       - |          - |       - |    2,874 |      2,874 | 
| of share-based     |         |         |         |         |            |         |          |            | 
| payments           |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Transfer to share  |       - |       - |       - |       - |          - | (5,054) |    5,054 |          - | 
| option reserve     |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Transactions with  |     337 |       - |       - |       - |          - | (5,391) |    7,928 |      2,874 | 
| owners             |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
|                    |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Loss for the year  |       - |       - |       - |       - |          - |       - |  (1,985) |    (1,985) | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Other              |         |         |         |         |            |         |          |            | 
| comprehensive      |         |         |         |         |            |         |          |            | 
| income:            |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Cash flow hedges   |       - |       - |      65 |       - |          - |       - |        - |         65 | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| Total              |       - |       - |      65 |       - |          - |       - |  (1,985) |    (1,920) | 
| comprehensive      |         |         |         |         |            |         |          |            | 
| income for the     |         |         |         |         |            |         |          |            | 
| year               |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
|                    |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
| At 31 March 2010   |  34,026 |   6,608 |   (416) |       - |        125 |     419 |    7,971 |     48,733 | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
|                    |         |         |         |         |            |         |          |            | 
+--------------------+---------+---------+---------+---------+------------+---------+----------+------------+ 
 
 
 
 
 
 
 
 
 
Notes to the preliminary announcement of results 
 
Principal accounting policies 
 
Digital Marketing Group plc is a Company incorporated in the UK. 
 
The financial information set out in this preliminary announcement does not 
constitute statutory information as defined in section 434 of the Companies Act 
2006. 
 
The consolidated balance sheet at 31 March 2010 and the consolidated statement 
of comprehensive income, consolidated cash flow statement, consolidated 
statement of changes in equity and associated notes for the year then ended have 
been extracted from the Group's 2010 statutory financial statements upon which 
the auditor's opinion is unmodified and does not include any statement under 
section 498 (2) or (3) of the Companies Act 2006. 
 
Those financial statements have not yet been delivered to the registrar of 
companies. 
 
The consolidated financial statements consolidate those of the Company and its 
subsidiaries (together referred to as the 'Group'). 
 
The consolidated financial statements have been prepared and approved by the 
Directors in accordance with International Financial Reporting Standards as 
adopted by the EU (Adopted IFRSs). The consolidated financial statements have 
been prepared under the historical cost convention, except for certain financial 
instruments that are held at fair value. 
 
The accounting policies which remained unchanged from the previous year, unless 
otherwise stated, have been applied consistently to all periods presented in 
those consolidated financial statements. 
 
Judgements made by the Directors in the application of these accounting policies 
that have a significant effect on the consolidated financial statements together 
with estimates with a significant risk of material adjustment in the next year 
are discussed in note 13. 
 
 
Changes in accounting policy 
 
Effective in the year 31 March 2010 
A revised IAS 1 'Presentation of Financial Statements' was issued in September 
2007 and has been adopted in these financial statements. The revision is aimed 
at improving users' ability to analyse and compare the information given in the 
financial statements, and will mean a significant change to the format of the 
primary statements. 
 
IFRS 8 'Operating Segments' has been adopted during the year. This IFRS required 
entities to disclose information to enable users of its financial statements to 
evaluate the nature and financial effects of the business activities in which it 
engages. This may result in additional disclosure for the Group but does not 
materially impact the results of the Group. 
 
The Group has adopted the amendments to IFRS 7, 'Financial Instruments' and has 
categorisedfinancial instruments held at fair value into a three level fair 
value hierarchy. The Group has taken advantage of the transitional provisions 
and has not provided comparative information. 
Going concern 
The Directors have reviewed the forecasts for 2010/11 and 2011/12 which have 
been adjusted to take account of the current trading environment. The Directors 
consider the forecasts to be prudent and have assessed the impact of them on the 
Group's cash flow, facilities and headroom within its banking covenants. 
Further, the Directors have assessed the future funding requirements of the 
Group and compared them with the level of available borrowing facilities. Based 
on this work, the Directors are satisfied that the Group has adequate resources 
to continue in operational existence for the 12 months from the date of these 
accounts. For this reason they continue to adopt the going concern basis in 
preparing the financial statements. 
 
Segmental reporting 
The Group reports its business activities on a two pillar basis identified as 
DMG and 20:20 and is therefore organised on this basis. In previous years this 
has been reported on a vertical business activity basis. The comparative 
information has been amended to reflect this change of management reporting. 
 
 
 
 
 
 
 
1.     Segmental analysis 
 
The Group reports its business activities on a two pillar basis identified as 
DMG and 20:20 and is therefore organised on this basis. In previous years this 
has been reported on a vertical business activity basis. The comparative 
information has been amended to reflect this change of management reporting. 
 
The entity derives its revenue from the provision of digital marketing services. 
 
+-----------------------+----------+----------+-------------+----------+ 
| For the year ended 31 |          |          |             |          | 
| March 2010            |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
|                       |    20:20 |      DMG | Unallocated |    Total | 
+-----------------------+----------+----------+-------------+----------+ 
|                       |  GBP'000 |  GBP'000 |     GBP'000 |  GBP'000 | 
+-----------------------+----------+----------+-------------+----------+ 
| Revenue from external |   27,832 |   21,322 |       (690) |   48,464 | 
| customers             |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Direct costs          | (11,382) |  (2,160) |         538 | (13,004) | 
+-----------------------+----------+----------+-------------+----------+ 
| Gross profit          |   16,450 |   19,162 |       (152) |   35,460 | 
+-----------------------+----------+----------+-------------+----------+ 
| Other operating       |        7 |    1,702 |           - |    1,709 | 
| income                |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Operating expenses    | (12,572) | (15,511) |       (739) | (28,822) | 
| excluding             |          |          |             |          | 
| depreciation,         |          |          |             |          | 
| amortisation and      |          |          |             |          | 
| charges for share     |          |          |             |          | 
| based payments        |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Operating profit      |    3,885 |    5,353 |       (891) |    8,347 | 
| before depreciation,  |          |          |             |          | 
| amortisation and      |          |          |             |          | 
| charges for share     |          |          |             |          | 
| based payments        |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Depreciation          |    (204) |    (345) |        (25) |    (574) | 
+-----------------------+----------+----------+-------------+----------+ 
| Amortisation          |  (1,010) |    (928) |           - |  (1,938) | 
+-----------------------+----------+----------+-------------+----------+ 
| Impairment            |  (2,519) |  (1,254) |        (14) |  (3,787) | 
+-----------------------+----------+----------+-------------+----------+ 
| Charges for share     |     (22) |  (1,381) |     (1,522) |  (2,925) | 
| based payments        |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Operating             |      130 |    1,445 |     (2,452) |    (877) | 
| profit/(loss)         |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Finance income        |          |          |             |        2 | 
+-----------------------+----------+----------+-------------+----------+ 
| Finance costs         |          |          |             |    (534) | 
+-----------------------+----------+----------+-------------+----------+ 
| Loss before tax       |          |          |             |  (1,409) | 
+-----------------------+----------+----------+-------------+----------+ 
| Taxation              |          |          |             |    (576) | 
+-----------------------+----------+----------+-------------+----------+ 
| Loss for the period   |          |          |             |  (1,985) | 
| from continuing       |          |          |             |          | 
| operations            |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
 
 
 
+-----------------------+----------+----------+-------------+----------+ 
| For the year ended 31 |          |          |             |          | 
| March 2009            |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
|                       |    20:20 |      DMG | Unallocated |    Total | 
+-----------------------+----------+----------+-------------+----------+ 
|                       |  GBP'000 |  GBP'000 |     GBP'000 |  GBP'000 | 
+-----------------------+----------+----------+-------------+----------+ 
| Revenue from external |   28,229 |   30,053 |     (1,628) |   56,654 | 
| customers             |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Direct costs          | (12,194) |  (4,535) |       1,628 | (15,101) | 
+-----------------------+----------+----------+-------------+----------+ 
| Gross profit          |   16,035 |   25,518 |           - |   41,553 | 
+-----------------------+----------+----------+-------------+----------+ 
| Other operating       |      192 |        - |           - |      192 | 
| income                |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Operating expenses    | (11,984) | (18,899) |     (1,574) | (32,457) | 
| excluding             |          |          |             |          | 
| depreciation,         |          |          |             |          | 
| amortisation and      |          |          |             |          | 
| charges for share     |          |          |             |          | 
| based payments        |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Operating profit      |          |          |             |          | 
| before depreciation,  |          |          |             |          | 
| amortisation and      |    4,243 |    6,619 |     (1,574) |    9,288 | 
| charges for share     |          |          |             |          | 
| based payments        |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Depreciation          |    (255) |    (391) |        (22) |    (668) | 
+-----------------------+----------+----------+-------------+----------+ 
| Amortisation          |    (990) |    (873) |           - |  (1,863) | 
+-----------------------+----------+----------+-------------+----------+ 
| Charges for share     |    (132) |  (1,092) |     (1,812) |  (3,036) | 
| based payments        |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
| Operating profit      |    2,866 |    4,263 |     (3,408) |    3,721 | 
+-----------------------+----------+----------+-------------+----------+ 
| Finance income        |          |          |             |       97 | 
+-----------------------+----------+----------+-------------+----------+ 
| Finance costs         |          |          |             |    (704) | 
+-----------------------+----------+----------+-------------+----------+ 
| Profit before tax     |          |          |             |    3,114 | 
+-----------------------+----------+----------+-------------+----------+ 
| Taxation              |          |          |             |  (1,674) | 
+-----------------------+----------+----------+-------------+----------+ 
| Profit for the period |          |          |             |          | 
| from continuing       |          |          |             |    1,440 | 
| operations            |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
|                       |          |          |             |          | 
+-----------------------+----------+----------+-------------+----------+ 
 
 
 
 
 
+----------------------------+----------+---------+-------------+----------+ 
| Year ended 31 March 2010   |          |         |             |          | 
+----------------------------+----------+---------+-------------+----------+ 
|                            |          |         |             |          | 
+----------------------------+----------+---------+-------------+----------+ 
|                            |    20:20 |    DMG  | Unallocated |    Group | 
|                            |          |         |             |    Total | 
+----------------------------+----------+---------+-------------+----------+ 
|                            |  GBP'000 | GBP'000 |     GBP'000 |  GBP'000 | 
+----------------------------+----------+---------+-------------+----------+ 
|                            |          |         |             |          | 
+----------------------------+----------+---------+-------------+----------+ 
| Assets                     |   35,175 |  27,707 |      18,238 |   81,120 | 
+----------------------------+----------+---------+-------------+----------+ 
| Liabilities                | (10,227) | (5,137) |    (17,023) | (32,387) | 
+----------------------------+----------+---------+-------------+----------+ 
|                            |          |         |             |          | 
+----------------------------+----------+---------+-------------+----------+ 
| Capital employed           |   24,948 |  22,570 |       1,215 |   48,733 | 
+----------------------------+----------+---------+-------------+----------+ 
 
 
+----------------------------+----------+---------+-------------+----------+ 
| Year ended 31 March 2009   |          |         |             |          | 
+----------------------------+----------+---------+-------------+----------+ 
|                            |          |         |             |          | 
+----------------------------+----------+---------+-------------+----------+ 
|                            |    20:20 |     DMG | Unallocated |    Group | 
|                            |          |         |             |    Total | 
+----------------------------+----------+---------+-------------+----------+ 
|                            |  GBP'000 | GBP'000 |     GBP'000 |  GBP'000 | 
+----------------------------+----------+---------+-------------+----------+ 
|                            |          |         |             |          | 
+----------------------------+----------+---------+-------------+----------+ 
| Assets                     |   35,768 |  31,164 |      21,399 |   88,331 | 
+----------------------------+----------+---------+-------------+----------+ 
| Liabilities                | (10,734) | (8,069) |    (21,749) | (40,552) | 
+----------------------------+----------+---------+-------------+----------+ 
|                            |          |         |             |          | 
+----------------------------+----------+---------+-------------+----------+ 
| Capital employed           |   25,034 |  23,095 |       (350) |   47,779 | 
+----------------------------+----------+---------+-------------+----------+ 
 
 
Unallocated assets and liabilities consist predominantly of cash, external 
borrowings and deferred tax liabilities on intangible assets which have not been 
allocated to the business segments. 
 
 
Capital additions; Property, plant and equipment 
 
+-----------------------------+----------+----------+-------------+----------+ 
|                             |    20:20 |      DMG |             |    Group | 
|                             |          |          |             |    Total | 
|                             |          |          | Unallocated |          | 
+-----------------------------+----------+----------+-------------+----------+ 
|                             |  GBP'000 |  GBP'000 |     GBP'000 |  GBP'000 | 
+-----------------------------+----------+----------+-------------+----------+ 
|                             |          |          |             |          | 
+-----------------------------+----------+----------+-------------+----------+ 
| Year ended 31 March 2010    |       73 |      228 |           - |      301 | 
+-----------------------------+----------+----------+-------------+----------+ 
|                             |          |          |             |          | 
+-----------------------------+----------+----------+-------------+----------+ 
| Year ended 31 March 2009    |      115 |      160 |           8 |      283 | 
+-----------------------------+----------+----------+-------------+----------+ 
|                             |          |          |             |          | 
+-----------------------------+----------+----------+-------------+----------+ 
 
 
2.     Other operating income 
+-------------------------------------------------+---------+---------+ 
|                                                 |    2010 |    2009 | 
+-------------------------------------------------+---------+---------+ 
|                                                 | GBP'000 | GBP'000 | 
+-------------------------------------------------+---------+---------+ 
|                                                 |         |         | 
+-------------------------------------------------+---------+---------+ 
| Other operating income                          |   1,709 |     192 | 
+-------------------------------------------------+---------+---------+ 
 
During the year to 31 March 2010 the Group received part settlement from the 
administrator of a client for a contractual obligation to perform services on 
their behalf. It is anticipated there may be further distributions in the future 
but the Board is unaware of the quantum or timing of these potential receipts. 
 
 
3.     Other operating expenses 
+-------------------------------------------------+---------+---------+ 
|                                                 |    2010 |    2009 | 
+-------------------------------------------------+---------+---------+ 
|                                                 | GBP'000 | GBP'000 | 
+-------------------------------------------------+---------+---------+ 
|                                                 |         |         | 
+-------------------------------------------------+---------+---------+ 
| Wages and salaries                              |  21,961 |  24,310 | 
+-------------------------------------------------+---------+---------+ 
| Share based payments                            |   2,925 |   3,036 | 
+-------------------------------------------------+---------+---------+ 
| Administration                                  |   7,435 |   8,815 | 
+-------------------------------------------------+---------+---------+ 
| Impairment of intangible assets and goodwill    |   3,787 |       - | 
+-------------------------------------------------+---------+---------+ 
|                                                 |  36,108 |  36,161 | 
+-------------------------------------------------+---------+---------+ 
 
 
 
4.     Tax expense 
+-------------------------------------------------+---------+---------+ 
|                                                 |    2010 |    2009 | 
+-------------------------------------------------+---------+---------+ 
|                                                 | GBP'000 | GBP'000 | 
+-------------------------------------------------+---------+---------+ 
| Recognised in the consolidated statement of     |         |         | 
| comprehensive income:                           |         |         | 
+-------------------------------------------------+---------+---------+ 
| Current year tax                                |   1,134 |   2,160 | 
+-------------------------------------------------+---------+---------+ 
| Origination and reversal of temporary           |   (558) |   (486) | 
| differences                                     |         |         | 
+-------------------------------------------------+---------+---------+ 
| Total tax charge                                |     576 |   1,674 | 
+-------------------------------------------------+---------+---------+ 
|                                                 |         |         | 
+-------------------------------------------------+---------+---------+ 
| Reconciliation of total tax charge:             |         |         | 
+-------------------------------------------------+---------+---------+ 
| (Loss)/profit before tax                        | (1,409) |   3,114 | 
+-------------------------------------------------+---------+---------+ 
|                                                 |         |         | 
+-------------------------------------------------+---------+---------+ 
| Taxation using the UK Corporation Tax rate of   |   (395) |     872 | 
| 28% (2009: 28%)                                 |         |         | 
+-------------------------------------------------+---------+---------+ 
|                                                 |         |         | 
+-------------------------------------------------+---------+---------+ 
| Effects of:                                     |         |         | 
+-------------------------------------------------+---------+---------+ 
| Non deductible expenses                         |      94 |     160 | 
+-------------------------------------------------+---------+---------+ 
| Impairment of goodwill                          |     892 |       - | 
+-------------------------------------------------+---------+---------+ 
| Share based payment charges                     |     804 |     788 | 
+-------------------------------------------------+---------+---------+ 
| Schedule 23 deductions                          |   (805) |       - | 
+-------------------------------------------------+---------+---------+ 
| Other                                           |    (68) |     (5) | 
+-------------------------------------------------+---------+---------+ 
| Prior year adjustment                           |      54 |    (32) | 
+-------------------------------------------------+---------+---------+ 
| Utilisation of tax losses                       |       - |   (109) | 
+-------------------------------------------------+---------+---------+ 
| Total tax charge                                |     576 |   1,674 | 
+-------------------------------------------------+---------+---------+ 
 
5.     Earnings per share 
+-------------------------------------------------+---------+---------+ 
|                                                 |    2010 |    2009 | 
+-------------------------------------------------+---------+---------+ 
|                                                 |   Pence |   Pence | 
|                                                 |     per |     per | 
|                                                 |   Share |   Share | 
+-------------------------------------------------+---------+---------+ 
|                                                 |         |         | 
+-------------------------------------------------+---------+---------+ 
| Basic                                           | (2.88)p |   2.15p | 
+-------------------------------------------------+---------+---------+ 
| Diluted                                         | (2.88)p |   1.92p | 
+-------------------------------------------------+---------+---------+ 
 
Earnings per share have been calculated by dividing the profit attributable to 
shareholders by the weighted average number of ordinary shares in issue during 
the year. As the basic earnings per share is a loss a dilution does not take 
place. 
 
The calculations of basic and diluted earnings per share are: 
 
+-------------------------------------------------+---------+---------+ 
|                                                 |    2010 |    2009 | 
+-------------------------------------------------+---------+---------+ 
|                                                 | GBP'000 | GBP'000 | 
+-------------------------------------------------+---------+---------+ 
|                                                 |         |         | 
+-------------------------------------------------+---------+---------+ 
| (Loss)/profit for the year attributable to      | (1,985) |   1,440 | 
| shareholders                                    |         |         | 
+-------------------------------------------------+---------+---------+ 
 
Weighted average number of ordinary shares in issue: 
+-------------------------------------------------+------------+------------+ 
|                                                 |       2010 |       2009 | 
+-------------------------------------------------+------------+------------+ 
|                                                 |     Number |     Number | 
+-------------------------------------------------+------------+------------+ 
|                                                 |            |            | 
+-------------------------------------------------+------------+------------+ 
| Basic                                           | 69,009,912 | 66,851,000 | 
+-------------------------------------------------+------------+------------+ 
| Adjustment for share options                    |  6,934,553 |  7,105,000 | 
+-------------------------------------------------+------------+------------+ 
| Adjustment for warrants                         |          - |     66,000 | 
+-------------------------------------------------+------------+------------+ 
| Adjustment for shares to be issued              |          - |    168,000 | 
+-------------------------------------------------+------------+------------+ 
| Adjustments for contingent shares               |          - |    625,000 | 
+-------------------------------------------------+------------+------------+ 
| Diluted                                         | 75,944,465 | 74,815,000 | 
+-------------------------------------------------+------------+------------+ 
 
 
Adjusted earnings per share 
+-------------------------------------------------+---------+---------+ 
|                                                 |    2010 |    2009 | 
+-------------------------------------------------+---------+---------+ 
|                                                 |   Pence |   Pence | 
|                                                 |     per |     per | 
|                                                 |   Share |   Share | 
+-------------------------------------------------+---------+---------+ 
| From continuing and discontinued operations     |         |         | 
+-------------------------------------------------+---------+---------+ 
| Basic adjusted earnings per share               |   8.77p |   8.76p | 
+-------------------------------------------------+---------+---------+ 
| Diluted adjusted earnings per share             |   7.97p |   7.82p | 
+-------------------------------------------------+---------+---------+ 
 
Adjusted earnings per share have been calculated by dividing the profit 
attributable to shareholders before amortisation and charges for share options 
by the weighted average number of ordinary shares in issue during the year. The 
numbers used in calculating the basic and diluted adjusted earnings per share 
are reconciled below: 
 
 
+-------------------------------------------------+---------+---------+ 
|                                                 |    2010 |    2009 | 
+-------------------------------------------------+---------+---------+ 
|                                                 | GBP'000 | GBP'000 | 
+-------------------------------------------------+---------+---------+ 
|                                                 |         |         | 
+-------------------------------------------------+---------+---------+ 
| (Loss)/profit before tax                        | (1,409) |   3,114 | 
+-------------------------------------------------+---------+---------+ 
| Amortisation                                    |   1,938 |   1,863 | 
+-------------------------------------------------+---------+---------+ 
| Impairment of carrying value of goodwill and    |   3,787 |       - | 
| intangibles                                     |         |         | 
+-------------------------------------------------+---------+---------+ 
| Charges for share options                       |   2,874 |   3,036 | 
+-------------------------------------------------+---------+---------+ 
| Adjusted profit attributable to shareholders    |   7,190 |   8,013 | 
+-------------------------------------------------+---------+---------+ 
| Current year tax charge                         | (1,134) | (2,160) | 
+-------------------------------------------------+---------+---------+ 
|                                                 |   6,056 |   5,853 | 
+-------------------------------------------------+---------+---------+ 
 
 
6.     Acquisitions 
On 11 December 2009 the Company acquired the trade and assets of 20:20 London. 
The net assets acquired, consideration paid, and goodwill arising on this 
acquisition is detailed below: 
 
+------------------------------+----------+------------+-------------+-------------+ 
|                              |          | Acquirees' |        Fair | Acquisition | 
|                              |          | book value |       value |     amounts | 
|                              |          |    GBP'000 | adjustments |     GBP'000 | 
|                              |          |            |     GBP'000 |             | 
+------------------------------+----------+------------+-------------+-------------+ 
|                              |          |            |             |             | 
+------------------------------+----------+------------+-------------+-------------+ 
| Acquirees' net assets at the |          |            |             |             | 
| acquisition date:            |          |            |             |             | 
+------------------------------+----------+------------+-------------+-------------+ 
| Trade and other receivables  |          |         49 |           - |          49 | 
+------------------------------+----------+------------+-------------+-------------+ 
| Net identifiable assets and  |          |         49 |           - |          49 | 
| liabilities                  |          |            |             |             | 
+------------------------------+----------+------------+-------------+-------------+ 
|                              |          |            |             |             | 
+------------------------------+----------+------------+-------------+-------------+ 
| Goodwill on acquisition      |          |            |             |       2,083 | 
+------------------------------+----------+------------+-------------+-------------+ 
|                              |          |            |             |       2,132 | 
+------------------------------+----------+------------+-------------+-------------+ 
|                              |          |            |             |             | 
+------------------------------+----------+------------+-------------+-------------+ 
| Cash consideration paid (including legal and         |             |       1,632 | 
| professional fees of GBP132,000)                     |             |             | 
+------------------------------------------------------+-------------+-------------+ 
| Contingent consideration payable in cash or cash     |             |         500 | 
| and shares (note 12)                                 |             |             | 
+------------------------------------------------------+-------------+-------------+ 
|                              |          |            |             |       2,132 | 
+------------------------------+----------+------------+-------------+-------------+ 
| Summary of net cash outflow  |          |            |             |             | 
| from acquisitions:           |          |            |             |             | 
+------------------------------+----------+------------+-------------+-------------+ 
| Cash paid                    |          |            |             |       1,632 | 
+------------------------------+----------+------------+-------------+-------------+ 
| Cash acquired                |          |            |             |           - | 
+------------------------------+----------+------------+-------------+-------------+ 
| Net cash outflow from        |          |            |             |       1,632 | 
| acquisitions in the year     |          |            |             |             | 
+------------------------------+----------+------------+-------------+-------------+ 
 
 
 
The acquired business contributed revenues of GBP402,000 and contributed net 
profit, before amortisation and share based charges, of GBP75,000 to the Group 
for the period from 11 December 2009 to 31 March 2010. Had the acquisition 
occurred on 1 April 2009, the contribution to group revenue would have been 
GBP1.0 million. This has been based on the management accounts and information 
of 20:20 London operating as an unincorporated business. 
 
 
7.     Property, plant and equipment 
+--------------------+-----------+--------------+----------+-----------+---------+ 
|                    |  Freehold |    Leasehold |    Motor |           |   Total | 
|                    |  land and | improvements | vehicles |    Office |         | 
|                    | buildings |              |          | equipment |         | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
|                    |   GBP'000 |      GBP'000 |  GBP'000 |   GBP'000 | GBP'000 | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| Cost               |           |              |          |           |         | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| At 1 April 2008    |     1,150 |          270 |        6 |     1,482 |   2,908 | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| Acquisitions of    |         - |           39 |        - |       194 |     233 | 
| subsidiaries       |           |              |          |           |         | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| Additions          |         - |            - |        - |       283 |     283 | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| Disposals          |         - |          (7) |        - |       (3) |    (10) | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
|                    |           |              |          |           |         | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| At 31 March 2009   |     1,150 |          302 |        6 |     1,956 |   3,414 | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| Additions          |         - |            6 |       12 |       283 |     301 | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| Disposals          |         - |         (80) |      (6) |     (291) |   (377) | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| At 31 March 2010   |     1,150 |          228 |       12 |     1,948 |   3,338 | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
|                    |           |              |          |           |         | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| Depreciation       |           |              |          |           |         | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| At 1 April 2008    |        22 |           61 |        5 |       605 |     693 | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| Depreciation       |        29 |           62 |        1 |       576 |     668 | 
| charge for the     |           |              |          |           |         | 
| year               |           |              |          |           |         | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| Depreciation on    |         - |          (1) |        - |       (3) |     (4) | 
| disposals          |           |              |          |           |         | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| At 31 March 2009   |        51 |          122 |        6 |     1,178 |   1,357 | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| Depreciation       |        29 |           54 |        - |       491 |     574 | 
| charge for the     |           |              |          |           |         | 
| year               |           |              |          |           |         | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| Depreciation on    |         - |         (53) |      (6) |     (286) |   (345) | 
| disposals          |           |              |          |           |         | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| At 31 March 2010   |        80 |          123 |        - |     1,383 |   1,586 | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| Net book value     |           |              |          |           |         | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| At 31 March 2010   |     1,070 |          105 |       12 |       565 |   1,752 | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| At 31 March 2009   |     1,099 |          180 |        - |       778 |   2,057 | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
| At 1 April 2008    |     1,128 |          209 |        1 |       877 |   2,215 | 
+--------------------+-----------+--------------+----------+-----------+---------+ 
 
The assets are covered by a fixed charge in favour of the Group's lenders. 
 
 
 
8.     Goodwill 
+-------------------------------------+---------+---------+----------+ 
|                                     |         |         | Goodwill | 
+-------------------------------------+---------+---------+----------+ 
|                                     |         |         |  GBP'000 | 
+-------------------------------------+---------+---------+----------+ 
| Cost and net book value             |         |         |          | 
+-------------------------------------+---------+---------+----------+ 
| At 1 April 2008                     |         |         |   39,449 | 
+-------------------------------------+---------+---------+----------+ 
| Acquisitions through business       |         |         |    7,602 | 
| combinations                        |         |         |          | 
+-------------------------------------+---------+---------+----------+ 
| At 31 March 2009                    |         |         |   47,051 | 
+-------------------------------------+---------+---------+----------+ 
| Reduction in deferred contingent    |         |         |    (294) | 
| consideration                       |         |         |          | 
+-------------------------------------+---------+---------+----------+ 
| Impairment                          |         |         |  (3,187) | 
+-------------------------------------+---------+---------+----------+ 
| Acquisitions through business       |         |         |    2,083 | 
| combinations                        |         |         |          | 
+-------------------------------------+---------+---------+----------+ 
| At 31 March 2010                    |         |         |   45,653 | 
+-------------------------------------+---------+---------+----------+ 
|                                     |         |         |          | 
|                                     |         |         |          | 
|                                     |         |         |          | 
|                                     |         |         |          | 
|                                     |         |         |          | 
|                                     |         |         |          | 
|                                     |         |         |          | 
|                                     |         |         |          | 
|                                     |         |         |          | 
|                                     |         |         |          | 
|                                     |         |         |          | 
|                                     |         |         |          | 
|                                     |         |         |          | 
|                                     |         |         |          | 
|                                     |         |         |          | 
|                                     |         |         |          | 
|                                     |         |         |          | 
+-------------------------------------+---------+---------+----------+ 
9.     Other intangible assets 
+-------------------------------------------------+---------+---------+ 
|                                                 |          Customer | 
|                                                 |    relationships, | 
|                                                 |    trademarks and | 
|                                                 |       development | 
|                                                 |             costs | 
+-------------------------------------------------+-------------------+ 
|                                                 |         | GBP'000 | 
+-------------------------------------------------+---------+---------+ 
| Cost                                            |         |         | 
+-------------------------------------------------+---------+---------+ 
| At 1 April 2008                                 |         |  15,052 | 
+-------------------------------------------------+---------+---------+ 
| Additions during the year                       |         |     105 | 
+-------------------------------------------------+---------+---------+ 
| Acquisitions through business combinations      |         |   4,550 | 
+-------------------------------------------------+---------+---------+ 
| At 31 March 2009                                |         |  19,707 | 
+-------------------------------------------------+---------+---------+ 
| Additions during the year                       |         |     694 | 
+-------------------------------------------------+---------+---------+ 
| At 31 March 2010                                |         |  20,401 | 
+-------------------------------------------------+---------+---------+ 
|                                                 |         |         | 
+-------------------------------------------------+---------+---------+ 
| Amortisation                                    |         |         | 
+-------------------------------------------------+---------+---------+ 
| At 1 April 2008                                 |         |   1,728 | 
+-------------------------------------------------+---------+---------+ 
| Amortisation charge for the year                |         |   1,863 | 
+-------------------------------------------------+---------+---------+ 
| At 31 March 2009                                |         |   3,591 | 
+-------------------------------------------------+---------+---------+ 
| Impairment                                      |         |     600 | 
+-------------------------------------------------+---------+---------+ 
| Amortisation charge for the year                |         |   1,938 | 
+-------------------------------------------------+---------+---------+ 
| At 31 March 2010                                |         |   6,129 | 
+-------------------------------------------------+---------+---------+ 
|                                                 |         |         | 
+-------------------------------------------------+---------+---------+ 
| Net book amount                                 |         |         | 
+-------------------------------------------------+---------+---------+ 
| At 31 March 2010                                |         |  14,272 | 
+-------------------------------------------------+---------+---------+ 
| At 1 April 2009                                 |         |  16,116 | 
+-------------------------------------------------+---------+---------+ 
| At 1 April 2008                                 |         |  13,324 | 
+-------------------------------------------------+---------+---------+ 
 
The cost of customer relationships was determined as at the date of acquisition 
of the subsidiaries by professional valuers. The valuations used the discounted 
cash flow method, assuming rates of customer attrition at 10% and sales growth 
at 2% each year. The discount rate applied to the future cash flows were 
specific to each subsidiary and were all in the range 14.6% to 15.5%. 
 
Goodwill and other intangible assets have been tested for impairment. On the 
basis of this review it has been decided to impair the carrying value of these 
intangible assets. 
 
 
 
10.   Bank and overdraft, loans and borrowings 
+--------------------------------+---------+----------+----------+----------+----------+---------+----------+ 
|                                          |                2010 |                2009 |               2008 | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
|                                          |             GBP'000 |             GBP'000 |            GBP'000 | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
|                                          |                     |                     |                    | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| Summary                                  |                     |                     |                    | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| Bank overdraft                           |               6,443 |               8,806 |              6,901 | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| Borrowings                               |               8,213 |               9,303 |              4,919 | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
|                                          |              14,656 |              18,109 |             11,820 | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| Borrowings are repayable as follows:     |                     |                     |                    | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| Within one year                          |                     |                     |                    | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| Bank overdraft                           |               6,443 |               8,806 |              6,901 | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| Borrowings                               |               1,865 |               1,984 |              1,453 | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| Total payments due within one year       |               8,308 |              10,790 |              8,354 | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| Less future interest                     |               (174) |               (293) |              (331) | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| Total due within one year                |               8,134 |              10,497 |              8,023 | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
|                                          |                     |                     |                    | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| In more than one year but not more than  |               6,596 |               1,928 |              1,373 | 
| two years                                |                     |                     |                    | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| In more than two years but not more      |                   - |               6,021 |              1,299 | 
| than three years                         |                     |                     |                    | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| In more than three years but not more    |                   - |                   - |                952 | 
| than four years                          |                     |                     |                    | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| In more than four years but not more     |                   - |                   - |                112 | 
| than five years                          |                     |                     |                    | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| Over five years                          |                   - |                   - |                645 | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| Total payments due in more than one      |               6,596 |               7,949 |              4,381 | 
| year                                     |                     |                     |                    | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| Less future interest                     |                (74) |               (337) |              (584) | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
| Total due in more than one year          |               6,522 |               7,612 |              3,797 | 
+------------------------------------------+---------------------+---------------------+--------------------+ 
|                                | GBP'000 |        % |                   % |                  % |          | 
|                                |         |          |                     |                    |          | 
|                                |         |          |                     |                    |          | 
| Average interest rates at the  |         |          |                     |                    |          | 
| balance sheet date were:       |         |          |                     |                    |          | 
+--------------------------------+---------+----------+---------------------+--------------------+----------+ 
|                                |         |          |                     |                    |          | 
+--------------------------------+---------+----------+---------------------+--------------------+----------+ 
| Overdraft                      |   6,443 |     2.75 |                5.00 |               7.50 |          | 
+--------------------------------+---------+----------+---------------------+--------------------+----------+ 
| Term loan                      |   1,813 |     1.96 |                2.96 |               7.30 |          | 
+--------------------------------+---------+----------+---------------------+--------------------+----------+ 
| Term loan                      |   1,000 |     2.46 |                3.46 |                  - |          | 
+--------------------------------+---------+----------+---------------------+--------------------+----------+ 
| Revolver loan                  |   5,400 |     2.33 |                3.46 |                  - |          | 
+--------------------------------+---------+----------+---------------------+--------------------+----------+ 
| Mortgage                       |       - |        - |                   - |               7.00 |          | 
+--------------------------------+---------+----------+---------------------+--------------------+----------+ 
|                                |         |          |          |          |          |         |          | 
+--------------------------------+---------+----------+----------+----------+----------+---------+----------+ 
 
 As the loans are at variable market rates their carrying amount is 
equivalent to their fair value. 
 
In 2007 the Group purchased an interest rate swap of 6.19% for the period 2007 
to 2012 for GBP4,000,000 of its borrowings. 
 
 The borrowing facilities available to the Group at 31 March 2010 was 
GBP11.24 million (2009: GBP13.02m) and, taking into account cash balances within 
the Group companies, there was GBP3.99 million (2009: GBP6.92m) of available 
borrowing facilities. 
 
 A Composite Accounting System is set up with the Group's bankers, which 
allows debit balances on overdraft to be offset across the Group with credit 
balances. 
 
Reconciliation of net debt 
 
+--------------------------+---------+---------+----------+---------+ 
|                          | 1 April |    Cash | Non-cash |      31 | 
|                          |    2009 |    Flow |    items |   March | 
|                          |         |         |          |    2010 | 
+--------------------------+---------+---------+----------+---------+ 
|                          | GBP'000 | GBP'000 |  GBP'000 | GBP'000 | 
+--------------------------+---------+---------+----------+---------+ 
|                          |         |         |          |         | 
+--------------------------+---------+---------+----------+---------+ 
| Cash and cash            |  12,227 | (4,828) |        - |   7,399 | 
| equivalents              |         |         |          |         | 
+--------------------------+---------+---------+----------+---------+ 
| Overdraft                | (8,806) |   2,363 |        - | (6,443) | 
+--------------------------+---------+---------+----------+---------+ 
|                          |   3,421 | (2,465) |        - |     956 | 
+--------------------------+---------+---------+----------+---------+ 
| Borrowings               | (9,303) |   1,178 |     (88) | (8,213) | 
+--------------------------+---------+---------+----------+---------+ 
| Net Debt                 | (5,882) | (1,287) |     (88) | (7,257) | 
+--------------------------+---------+---------+----------+---------+ 
|                          |         |         |          |         | 
+--------------------------+---------+---------+----------+---------+ 
 The non-cash movement relates to the pre-paid loan fees on the Group's term 
loans. 
 
 
11.   Share capital 
On 4 September 2009, by way of a special resolution, the Company reorganised and 
enlarged its authorised share capital of GBP50,049,999 consisting of 100,000,000 
ordinary shares of 50 pence each and 49,999 redeemable preference shares of 
GBP1.00 each into authorised share capital of GBP55,000,000 consisting of 
200,000,000 ordinary shares of 5 pence each and 100,000,000 deferred shares of 
45 pence each and cancelling 49,999 redeemable preference shares of GBP1.00 
each. 
 
Authorised: 
+-----------------------+----------+------------+----------+----------+ 
|                       |          |            |          |          | 
+-----------------------+----------+------------+----------+----------+ 
|                       |      50p |    GBP1.00 |      45p |       5p | 
|                       | ordinary | redeemable | deferred | ordinary | 
|                       |   shares | preference |   shares |   shares | 
|                       |          |     shares |          |          | 
+-----------------------+----------+------------+----------+----------+ 
|                       |  GBP'000 |    GBP'000 |  GBP'000 |  GBP'000 | 
+-----------------------+----------+------------+----------+----------+ 
| Authorised share      |   50,000 |         50 |        - |        - | 
| capital at 31 March   |          |            |          |          | 
| 2009                  |          |            |          |          | 
+-----------------------+----------+------------+----------+----------+ 
| Cancelled             |        - |       (50) |        - |        - | 
+-----------------------+----------+------------+----------+----------+ 
| 5p Ordinary           |  (5,000) |          - |        - |    5,000 | 
+-----------------------+----------+------------+----------+----------+ 
| 45p Deferred          | (45,000) |          - |   45,000 |        - | 
+-----------------------+----------+------------+----------+----------+ 
| Increase in           |        - |          - |        - |    5,000 | 
| authorised share      |          |            |          |          | 
| capital               |          |            |          |          | 
+-----------------------+----------+------------+----------+----------+ 
| At 31 March 2010      |        - |          - |   45,000 |   10,000 | 
+-----------------------+----------+------------+----------+----------+ 
 
Allotted, issued and fully paid 
+-----------------------+--------------+------------+------------+---------+-+ 
|                       |              |            |            |         |  | 
+-----------------------+--------------+------------+------------+---------+-+ 
|                       |          50p |        45p |         5p |           | 
|                       |     ordinary |   deferred |   ordinary |           | 
|                       |       shares |     shares |     shares |           | 
+-----------------------+--------------+------------+------------+-----------+ 
|                       |       Number |     Number |     Number | GBP'000 |  | 
+-----------------------+--------------+------------+------------+---------+-+ 
| Issued share capital  |   65,309,782 |          - |          - |  32,655 |  | 
| at 31 March 2008      |              |            |            |         | | 
+-----------------------+--------------+------------+------------+---------+-+ 
| Issue of ordinary     |    2,318,738 |          - |          - |   1,159 |  | 
| shares during the     |              |            |            |         | | 
| year                  |              |            |            |         | | 
+-----------------------+--------------+------------+------------+---------+-+ 
| Shares repurchased    |    (250,000) |          - |          - |   (125) |  | 
+-----------------------+--------------+------------+------------+---------+-+ 
|                       |              |            |            |         |  | 
+-----------------------+--------------+------------+------------+---------+-+ 
| Issued share capital  |   67,378,520 |          - |          - |  33,689 |  | 
| at 31 March 2009      |              |            |            |         | | 
+-----------------------+--------------+------------+------------+---------+-+ 
|                       |              |            |            |         |  | 
+-----------------------+--------------+------------+------------+---------+-+ 
| Conversion            | (67,378,520) | 67,378,520 | 67,378,520 |       - |  | 
+-----------------------+--------------+------------+------------+---------+-+ 
| Issue of ordinary     |            - |          - |  6,742,985 |     337 |  | 
| shares during the     |              |            |            |         | | 
| year                  |              |            |            |         | | 
+-----------------------+--------------+------------+------------+---------+-+ 
| At 31 March 2010      |            - | 67,378,520 | 74,121,505 |  34,026 |  | 
+-----------------------+--------------+------------+------------+---------+-+ 
|                       |              |            |            |         |  | 
+-----------------------+--------------+------------+------------+---------+-+ 
 
The 5 pence ordinary shares have the same rights (including voting and dividend 
rights and rights on a return of capital) as the previous 50 pence ordinary 
shares. Holders of the 45 pence deferred shares do not have any right to receive 
notice of any general meeting of the Company or any right to attend, speak or 
vote at any such meeting. The deferred share holders are not entitled to receive 
any dividend or other distribution and shall on a return of assets in a winding 
up of the Company entitle the holders only to the repayment of the amounts paid 
up on the shares after the amount paid to the holders of the new ordinary shares 
exceeds GBP1,000,000 per new ordinary share. The deferred shares will also be 
incapable of transfer and no share certificates will be issued in respect of 
them. 
 
The shares issued in the year were as a result of the exercise of share options 
by employees and Directors. 
 
 
12.   Contingent liabilities 
Some acquisitions by the Group involve an earn-out agreement whereby the 
consideration payable includes a deferred element of cash or shares or both 
which is contingent on the future financial performance of the acquired entity. 
 
 The maximum liability is GBP9,000,000 (2009: GBP9,100,000) and the 
Directors have assessed the likely payments based on forecasts and have provided 
GBP4,225,000 (2009: GBP4,425,000), leaving GBP4,775,000 (2009: GBP4,675,000) as 
an unprovided liability. 
 
 The amounts provided for are payable as follows: 
+--------------------------------------------+----------+----------+ 
|                                            |     2010 |     2009 | 
+--------------------------------------------+----------+----------+ 
|                                            |  GBP'000 |  GBP'000 | 
+--------------------------------------------+----------+----------+ 
|                                            |          |          | 
+--------------------------------------------+----------+----------+ 
| In one year or less                        |        - |      600 | 
+--------------------------------------------+----------+----------+ 
| In more than one year but less than five   |    4,225 |    3,825 | 
| years                                      |          |          | 
+--------------------------------------------+----------+----------+ 
|                                            |    4,225 |    4,425 | 
+--------------------------------------------+----------+----------+ 
 
 The amounts provided have not been discounted. 
 
 
 
13.   Accounting estimates and judgements 
Accounting estimates 
 
Impairment of goodwill 
The carrying amount of goodwill is GBP45,653,000 (2009: GBP47,051,000). The 
Directors are confident that the carrying amount of goodwill is fairly stated, 
and have carried out an impairment review. 
 
Other intangible assets 
 
The valuation of customer lists is based on key assumptions which the Directors 
have assessed, and are satisfied that the carrying value of these assets is 
fairly stated. 
 
Share-based payment 
 
The share based payment charge consists of two charges. 
 
 A charge for the fair value at the date of grant of the share based 
remuneration calculated using the BlackScholes method, in previous years a 
trinomial pricing model was adopted. In considering an appropriate charge the 
Directors have used an internally generated calculation to derive an appropriate 
charge. Based on these calculations a charge of GBP2,874,000 has been made. In 
previous years the Directors commissioned an independent valuation from American 
Appraisal UK Limited and adopted their findings, in the year ended 31 March 2009 
a charge of GBP2,814,000 was made. 
 
During the previous year the Group transferred the liability to settle the 
Employer's NI from the share option holder to the Group.  As a result the Group 
has charged GBP51,000 (2009: GBP222,000) in the year as an additional Share 
Based Payment charge.  The future Employers NI liability has been discounted 
over the three year period using a discount rate of 10%. 
 
Fair values on acquisition 
 
The Directors have assessed the fair value of assets and liabilities on the 
acquisition of the subsidiary companies. 
 
Deferred consideration 
 
The Directors have provided an estimate of the amount payable in respect of 
deferred contingent consideration. See note 12. 
 
Accounting judgements 
 
Recognition of revenue as principal or agent 
 
The Directors consider that they act as a principal in transactions where the 
Group assumes the credit risk. Where this is via an agency arrangement and the 
Group assumes the credit risk for all billings it therefore recognises gross 
billings as revenue. 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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