RNS Number:2441C
Hemscott PLC
24 August 2004
HEMSCOTT PLC
Acquisition of CoreData
Partial Offer
Interim results (unaudited) for the 6 months ended 30 June 2004
£20m convertible note available for acquisition financing
Hemscott plc ('Hemscott' or 'Company') announces the acquisition of CoreData,
Inc ('CoreData') together with its interim results. A Partial Offer for Hemscott
is also being announced separately today.
Key Points
* Acquisition of CoreData, a long-standing high quality
North American data provider, for a total consideration of £7.3 million made up
of £600,000 in cash and 16.5 million consideration shares.
* Partial Offer by Centerpoint Data, LLC ('C-P Data'), the
100% owner of CoreData for 10.0 million Hemscott ordinary shares at 55p in cash
each
* Interim results (unaudited) demonstrate continued
excellent progress
- Revenues in the half year increased by 8%
- EBITDA positive and losses before tax reduced by 69%
- Cash position remains strong at £5.9m (pre-acquisition)
* £20m Convertible Note facility available to provide
capital for further acquisitions as an alternative to traditional equity funding
structures
Acquisition highlights
The combination of Hemscott and CoreData creates an international financial data
and applications provider. In particular CoreData provides Hemscott with:
* North American business and financial information collected over 30
years which is difficult to build or replicate;
* An immediate presence in the important US business information
market;
* An existing US high quality customer base with over 100 clients;
* Experienced management team in the US;
* Growth opportunities to incorporate North American data into
Hemscott's products
- Increased product offering to UK customers through the
incorporation of North American data; and
- Platform to replicate Hemscott's business model into the US,
the largest financial market in the world.
Partial Offer Highlights
As a result of the Acquisition and Partial Offer, VS&A Communications Partners
III, L.P. ('Fund III'), the majority shareholder of C-P Data and an affiliate of
Veronis Suhler Stevenson, the New York based media merchant bank, will become an
indirect majority shareholder of Hemscott. Accordingly, Fund III will:
* Bring to Hemscott a leading information industry investor committed
to the ongoing development of the group;
* Emerge with a 54% indirect shareholding in Hemscott after the
closing of the Partial Offer;
* Have non-executive representation on the Hemscott board; and
* Provide capital strength to facilitate further acquisitions
including a £20 million convertible loan note facility.
Commenting on today's announcements, Michael Grade, Chairman, said:
'We are delighted with the progress the Company has made to date and with the
growth opportunity that CoreData offers. The Board is confident of the combined
management's abilities, under Ros Wilton's leadership, to maximise the potential
the transaction presents. We look forward to welcoming Scott Troeller and Marco
Sodi, both of whom are partners in VSS, to the Board.'
Rosalyn Wilton, Chief Executive, added:
'This is a transformational deal. It takes us into the US, brings the US data to
our UK business, and gives us a strong underlying shareholder with a deep
knowledge of the sector and a history of building businesses. The combined group
will have 30 years of North American and 20 years of UK financial information as
well as an extensive database of directors' biographies, and remuneration. We
are very excited about the future.'
Scott Troeller, Partner of Veronis Suhler Stevenson, said:
'We are very pleased to be putting CoreData and Hemscott together. The
combination accelerates both companies' goals of providing independent and
flexible data solutions on an international basis and brings together two
complementary management teams with tremendous capabilities. This is a
wonderful platform with proprietary information assets from which we will
continue to grow and build.'
ENQUIRIES
Hemscott plc Tel: +44 (0)20 7496 0055
Rosalyn Wilton, Chief Executive
KBC Peel Hunt Ltd Tel: +44 (0)20 7418 8900
Adam Hart/ Megan MacIntyre
College Hill Tel: +44 (0)20 7457 2020
Matthew Smallwood/ Peter Ogden
KBC Peel Hunt Ltd, which is authorised and regulated in the United Kingdom by
the Financial Services Authority, is acting exclusively for Hemscott and for no
one else in connection with the Partial Offer and is not advising any other
person or treating any other person as its client in relation thereto and will
not be responsible to anyone other than Hemscott for providing the protections
afforded to clients of KBC Peel Hunt, or for giving advice to any other person
in relation to the Partial Offer, the contents of this announcement or any other
matter referred to herein.
Investec Investment Banking, a division of Investec Bank (UK) Limited, which is
authorised and regulated in the United Kingdom by the Financial Services
Authority, is acting exclusively for C-P Data and for no one else in connection
with the Partial Offer and is not advising any other person or treating any
other person as its client in relation thereto and will not be responsible to
anyone other than C-P Data for providing the protections afforded to clients of
Investec or for giving advice to any other person in relation to the Partial
Offer, the contents of this announcement or any other matter referred to herein.
The directors of Hemscott accept responsibility for the information contained in
this announcement. To the best of the knowledge and belief of the directors of
Hemscott (having taken all reasonable care to ensure that such is the case) such
information is in accordance with the facts and does not omit anything likely to
affect the import of such information.
Acquisition of CoreData
Transaction summary
The Directors of Hemscott plc ('Hemscott' or 'Company') have reached agreement
with Centerpoint Data, LLC ('C-P Data') to acquire its wholly owned US business,
CoreData, Inc. ('CoreData') by way of acquiring Centerpoint Data, Inc,
CoreData's holding company (the 'Acquisition') for £600,000 in cash and
16,472,225 ordinary shares of 5p each ('Hemscott Shares') (the 'Consideration
Shares'). The Acquisition values CoreData at £7.3 million based on the closing
price of 40.5p per Hemscott Share on 23 August 2004.
The majority shareholder in C-P Data is VS&A Communication Partners III, L.P.,
('Fund III'), a $1 billion private equity investment fund and an affiliate of
Veronis Suhler Stevenson ('VSS'), the New York based media merchant bank.
Following the issue of the Consideration Shares, C-P Data will hold 16,472,225
Hemscott Ordinary Shares representing 33.9 per cent. of the enlarged issued
share capital. C-P Data is today also making a partial offer to all Hemscott
Shareholders to acquire 10.0 million Hemscott Shares at 55p per share in cash
(the 'Partial Offer'), which will result in C-P Data holding 54.5 per cent of
Hemscott's enlarged issued share capital upon the Partial Offer becoming wholly
unconditional. Finmedia Limited ('Finmedia'), which currently owns 17.7 million
Hemscott Shares (representing 55.08 per cent. of Hemscott's current issued share
capital), has agreed to accept the Partial Offer in respect of 10.0 million
Hemscott Shares (subject to scaling back to the extent that other Hemscott
shareholders accept the Partial Offer). Further details of the Partial Offer and
certain other arrangements are set out in an announcement made today by Investec
on behalf of C-P Data.
Information on CoreData
CoreData is a financial data provider that serves the business information needs
of major financial institutions, public corporations, business websites, and
financial data redistributors. CoreData provides its clients with high quality
data, timely information, and flexible licensing partnerships.
CoreData's databases offer extensive historical financial data and stock price
information on US and Canadian publicly traded companies, 215 industry groups,
and major equity markets. CoreData's time series data dates back to the early
1970's, and includes:
- Annual and quarterly financial information
- Price and volume data
- Detailed earnings data
- Growth and valuation metrics
- Executive compensation data
- Industry aggregates
- Historical index levels and returns
In 2003, C-P Data acquired the business of Media General Financial Services ('
MGFS') and renamed it CoreData. CoreData builds on the MGFS 30-year tradition of
providing high-quality financial information. It is headquartered in the
Washington, DC area, with a data production facility in Richmond, Virginia.
C-P Data is backed by the private equity affiliate of VSS, a leading independent
merchant bank dedicated to the media, communications and information industries.
VSS has completed over 600 transactions since its inception in 1981. Further
information on VSS can be found at www.vss.com.
In the half year to 30 June 2004, CoreData had audited revenues of US$2.5
million, EBITDA of US$70,480, loss before tax of US$1.3 million and, as at that
date, total shareholders' equity was US$11.4 million.
Rationale
The Acquisition:
* Provides Hemscott with an established provider of North American
business and financial information which has been collected over 30 years, an
asset which is difficult to replicate;
* Provides Hemscott with an immediate presence in the US, which
represents the largest single market in the world for business information;
* Brings together valuable intellectual property consisting of
recognised data sources for two of the world's largest financial markets and
access to a high quality customer base;
* The two businesses are complementary in terms of content,
geographical coverage and provide synergy and product-sharing opportunities;
* Allows CoreData to accelerate its growth by gaining access to
Hemscott's software applications, and provides Hemscott with US business
information to offer its UK customers;
* The combination of Hemscott and CoreData creates a quality source of
information in two of the largest equity markets in the world;
* Establishes Hemscott as a platform with critical mass, allowing it
to more effectively participate in the on-going consolidation of the financial
information market; and
* Establishes Hemscott as a leading supplier of both US and UK
Directors' biographies and remuneration, with the ability to create cross-border
benchmarking tools.
The enlarged group will seek to fully exploit the opportunities presented by the
Acquisition, in particular by accelerating both the collection of data (in
existing and new markets) and the efficiencies which can be derived from
implementing common technology platforms. These initiatives are expected to
increase costs and cash usage in the short term.
Acquisition details
The Acquisition is conditional on, among other things, admission of 16,243,940
of the Consideration Shares to trading on AIM, which is expected to take place
on Wednesday 25 August 2004. The remaining Consideration Shares are to be
allotted and issued to C-P Data, and admitted to trading on AIM following the
passing of certain resolutions at an extraordinary general meeting of the
Company, which is expected will be convened shortly, to enable such shares to be
allotted and issued. Following the issue of all the Consideration Shares, C-P
Data will hold 33.9 per cent. of the enlarged issued share capital of Hemscott.
Under the rules of the City Code on Takeovers and Mergers (the 'City Code'), it
would be usual for the Panel on Takeovers and Mergers (the 'Panel'), as a
condition of it agreeing to waive the obligation which would otherwise apply to
C-P Data to make a mandatory cash offer pursuant to Rule 9 of the City Code for
all of the Hemscott Shares not owned by C-P Data, to require that Hemscott
Shareholders approve such a waiver. However, Finmedia, which currently holds a
majority of the issued share capital of Hemscott, is in a position to approve
such a waiver, whether or not any other Hemscott Shareholder voted in favour of
or against such resolutions. Finmedia has confirmed to the Hemscott Board and
to the Panel that had such a resolution been put to Hemscott Shareholders, it
would have approved it. As a result of this confirmation, the Panel has waived
the requirement for C-P Data to make a mandatory cash offer pursuant to Rule 9
of the City Code and is not requiring that any other form of approval be sought
from Hemscott Shareholders.
As part of the Acquisition, Hemscott and CoreData have entered into a
shareholder agreement (the 'Controlling Shareholder Agreement') to regulate
certain aspects of the relationship between them. Pursuant to the terms of this
agreement, for as long as C-P Data holds 29.9 per cent or more of the issued
Hemscott Shares, it is entitled to nominate two non-executive directors and, if
it holds between 15 per cent and 29.9 per cent of the issued Hemscott Shares, it
has the right to nominate one non-executive director to be appointed to the
Hemscott Board. The agreement additionally contains certain anti-dilution
provisions and rights for C-P Data to participate in future equity issues,
intended to enable C-P Data to maintain its proportionate stake in Hemscott, and
provisions acknowledging the Company's ability to operate independently of C-P
Data. Further details of the Controlling Shareholder Agreement are set out in
the separate announcement relating to the Partial Offer (the 'Partial Offer
Announcement') being released today.
C-P Data has indicated that it proposes to appoint Scott Troeller and Marco
Sodi, both managing members of Fund III, to become directors of Hemscott, such
appointments to become effective upon the Partial Offer becoming or being
declared unconditional in all respects.
The Company has also issued (today) to C-P Data a Master Convertible Loan Note
(the 'Master Note') in an aggregate nominal amount of £20,000,000, paid up as to
£1 on issue. The Master Note constitutes unlisted, unsecured convertible loan
notes of Hemscott. The purpose of the Master Note is to provide the Company
with greater funding flexibility, by establishing the Master Note as an
available alternative to the traditional equity funding structures. The Master
Note will be available, subject to the satisfaction of certain conditions, for
acquisitions during the period of 12 months from the Partial Offer becoming or
being declared unconditional in all respects. Further details of the Master
Note are set out in the Partial Offer Announcement.
In order to further align the interests of senior employees with those of
Hemscott shareholders, various changes have been made to the employment terms
and incentives of such individuals. In addition, the Company has adopted a new
share incentive scheme, the Hemscott plc Share Option Plan. Further details of
these changes are set out in the Partial Offer Announcement and in a separate
announcement to be made today relating to dealings by directors, in accordance
with the AIM Rules.
To facilitate the issue of the remaining Consideration Shares and other issues,
a circular will be posted shortly to Hemscott shareholders (copies of which will
be available free of charge for one month at the Company's registered office
located at Finsbury Tower, 103 - 105 Bunhill Row, London EC1Y 8TY), attached to
which will be a notice convening an extraordinary general meeting of the Company
to approve resolutions to increase the authorised share capital of the Company
and to grant the directors of Hemscott a new authority to allot Hemscott Shares.
Interim results (unaudited) for the 6 months ended 30 June 2004
Highlights
Financial
* Revenues in the half year increased by 8%
* EBITDA positive* and losses before tax reduced by 69%
* Loss per share 0.6p (2003: loss 1.9p)
* Cash position remains strong at £5.9m (pre-acquisition)
Operational
* Business Information, driven by quality and depth of data and the
supply of bespoke information services, increased turnover by 6% compared to the
same period last year.
- Launch of Guru 2004
- Hemscott Premium Plus subscribers grown strongly
- Continued success of Investor Relations website services
* Media revenue up 16% driven by upturn in advertising market.
- Increase in internet advertising
*EBITDA of £6,000 is calculated as operating loss of £326,000 (2003: loss
£755,000) adding back depreciation of £198,000 (2003: £325,000) and goodwill
amortisation of £134,000 (2003: £134,000).
Chairman's Statement
The business has continued to make progress during the first half of 2004. The
Company was EBITDA positive during the period, for the first time since the
Company's admission to AIM in 2000. Both our divisions, Business Information and
Media, have met our expectations.
Hemscott owns, operates and controls a comprehensive, proprietary database for
which it has built applications offering a suite of data solutions. It has a
highly scalable business model that reuses the quality data collected and the
software applications that the company has developed.
Results
Revenue has continued to grow in line with our expectations. Turnover was £3.5m,
an increase of 8% with gross margin up to 56% from 52% over the comparable
period last year. EBITDA for the period was £6k and pre-tax loss was £0.2m,
significantly improved from last year.
We continue to exercise tight control over costs, while maintaining investment
in the core business.
Business Information
There has been further progress in this business area.
Data sales performed well in the first quarter, but have faced more challenging
conditions since then. We have seen good levels of repeat business and have
continued to invest in this part of the business including the strengthening of
the sales function.
The customer base for our proprietary GURU product, which is a sophisticated
specialist research tool, continues to grow. The first half of the year has also
benefited from the once off revenue generated by the 2004 book publication of
Directory of Directors and we launched the Directory of Directors online.
Premium Plus, the more in-depth version of our website subscription service
business has grown strongly this year and is proving popular with customers.
In our market leading business of Investor Relations' websites we have continued
to add high quality clients to an already impressive list. Our Investor
Relations website business has performed particularly well, driven by both the
increase in the number of IPOs and client endorsement of our continuously
enhanced product lines.
Business information turnover was £2.7m (2003: £2.6m), representing an increase
of 6%.
Media
Advertising on our website continues to recover from the lows experienced in
2002 and 2003. This has been driven largely by campaign advertisers who
increasingly value the quality and quantity of our website users.
Media turnover was £0.8m (2003: £0.7m), an increase of 16%.
Board
Winston Fletcher has decided to retire as a Non-Executive Director of Hemscott
plc with effect from the completion of the Partial Offer. Winston has served on
the Hemscott Board for four years and I personally would like to thank him for
his enormous contribution to the Company. The Hemscott Board is committed to
appoint a replacement independent Non-Executive Director at the earliest
opportunity.
On 19 April Simon Ashdown joined Hemscott and its board as Chief Financial
Officer.
Outlook
The Company has made real progress in the first half and we are pleased to see
the positive take up of our business information products, Hemscott Guru and
Premium Plus, which have proved very popular. Our Investor Relations business
also continues to perform well. However, the Company currently faces a
challenging trading environment in data sales. In addition, the retail market
started to slow down in May after a good bounce in the first quarter.
However, the Group continues to successfully develop innovative applications for
its proprietary high quality information. We have a balanced portfolio of
products and revenues focused on different customer segments which positions the
Company well to capitalise on a recovery in the retail market.
The acquisition of CoreData announced today sees a real step change in the
future strategy of the Group. The combination of Hemscott and CoreData creates a
powerful international financial data and applications provider. CoreData is an
excellent fit with Hemscott's business and provides significant opportunities
for growth. The Group will also benefit from the support of VSS going forward.
Michael Grade, Chairman
24 August 2004
ENQUIRIES
Hemscott plc Tel: +44 (0)20 7496 0055
Rosalyn Wilton, Chief Executive
KBC Peel Hunt Ltd Tel: +44 (0)20 7418 8900
Adam Hart/Megan MacIntyre
College Hill Tel: +44 (0)20 7457 2020
Matthew Smallwood/ Peter Ogden
Notes to editors:
1. Hemscott has established itself as a leading provider of quality corporate
information in the UK. Hemscott has succeeded in creating niche positions in
particular with its Directory of Directors database, and in providing investor
relations websites to publicly listed companies.
2. C-P Data is backed by the private equity affiliate of Veronis Suhler
Stevenson ('VSS'), a leading independent merchant bank dedicated to the media,
communications and information industries. VSS has completed over 600
transactions since its inception in 1981. Further information on VSS can be
found at www.vss.com.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Period ended Period ended Year ended 31
30 June 2004 30 June 2003 December 2003
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
Turnover 2 3,482 3,235 6,419
Cost of sales (1,529) (1,538) (3,053)
Gross profit 1,953 1,697 3,366
Operating expenses inc. goodwill amortisation (2,279) (2,452) (4,745)
Operating loss (326) (755) (1,379)
Interest receivable 134 139 243
Loss on ordinary activities before taxation (192) (616) (1,136)
Taxation on ordinary activities - - -
Retained loss for the period (192) (616) (1,136)
Loss per ordinary share - basic and diluted 3 (0.6p) (1.9p) (3.5p)
Loss per ordinary share - adjusted 3 (0.2p) (1.5p) (2.7p)
The group's results are derived from continuing operations and acquisitions.
There are no recognised gains or losses other than those shown above.
CONSOLIDATED BALANCE SHEET
At 30 June At 30 June At 31
2004 2003 December
2003
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
Fixed assets
Goodwill 1,549 1,816 1,683
Tangible assets 1,009 1,102 1,033
2,558 2,918 2,716
Current assets
Stocks 13 29 -
Debtors: amounts falling due within one year 1,393 1,225 1,059
Debtors : amounts falling due after more than one
year
502 502 502
Cash at bank and in hand 5,907 6,295 6,061
7,815 8,051 7,622
Creditors: amounts falling due within one year 4 (4,365) (4,249) (4,138)
Net current assets 3,450 3,802 3,484
Net assets 6,008 6,720 6,200
Capital and reserves
Called-up share capital 1,607 1,607 1,607
Share premium account 9,606 9,606 9,606
Capital redemption reserve 186 186 186
Other reserve (2,596) (2,596) (2,596)
Profit and loss account (2,795) (2,083) (2,603)
Shareholders' funds - equity 6,008 6,720 6,200
CONSOLIDATED CASH FLOW STATEMENT
Period ended Period ended Year ended 31
30 June 2004 30 June 2003 December 2003
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net cash outflow from operating activities (122) (750) (926)
Returns on investments and servicing of finance 142 151 278
Capital expenditure and financial investment (174) (190) (375)
Acquisitions and disposals
Acquisition of business - (258) (258)
Disposal of investments held for resale - 100 100
Net cash outflow from acquisitions and disposals - (158) (158)
Net cash outflow before management of liquid
resources and financing (154) (947) (1,181)
Management of liquid resources
Reduction in short term cash deposits 23 1,319 (722)
Net cash inflow (outflow) from management of 23 1,319 (722)
liquid resources
Increase (Decrease) in cash (131) 372 (1,903)
RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATIONS
Period ended Period ended Year ended
30 June 2004 30 June 2003
31 December 2003
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating loss (326) (755) (1,379)
Goodwill amortisation 134 134 267
Depreciation 198 326 594
Disposal of Fixed Assets - - 3
Movement in working capital (128) (455) (411)
Net cash outflow from operating activities (122) (750) (926)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
Period ended Period ended Year ended
30 June 2003
30 June 2004 31 December 2003
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
(see note 5)
Increase in cash (131) 372 (1,903)
Decrease in liquid resources (23) (1,319) 722
Decrease in net funds (154) (947) (1,181)
Opening net funds 6,061 7,242 7,242
Closing net funds 5,907 6,295 6,061
NOTES TO THE ACCOUNTS
1. Basis of preparation
The interim financial information for the half year ended 30 June 2004 has been
prepared on the basis of the accounting policies set out in the accounts for the
year ended 31 December 2003. The interim financial statements do not constitute
statutory accounts and are unaudited.
The group's results for the financial year ended 31 December 2003 have been
extracted from the statutory accounts filed with the Registrar of Companies
which contained an unqualified audit report and no adverse statement under
Section 237(2) or (3) of the Companies Act 1985.
2. Segment information
Period ended Period ended Year ended
30 June 2004 30 June 31 December 2003
2003
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Turnover
Business Information 2,730 2,584 5,080
Media 752 651 1,339
3,482 3,235 6,419
In the opinion of the directors it is not practicable to determine the operating
loss and net assets by business class principally because of the significant
amount of costs shared across all areas of the business.
3. Loss per share
The basic loss per share is calculated by dividing the losses attributable to
ordinary shareholders by the weighted average number of ordinary shares in issue
during the period.
The basic loss per share has been calculated on the loss for the period of
£192,000 (period to 30 June 2003: £616,000, year to 31 December 2003:
£1,136,000) and on 32,136,419 (period to 30 June 2003: 32,136,419, year to 31
December 2003: 32,136,419) ordinary shares.
The adjusted loss per share excludes the effect of goodwill amortisation and has
been calculated on the adjusted loss for the period of £58,000 (period to 30
June 2003: £482,000, year to 31 December 2003: £869,000).
4. Creditors
Creditors include deferred revenue on invoiced business paid up front of
£2,125,000 (period to 30 June 2003: £1,666,000, year to 31 December 2003:
£1,674,000).
5. Reconciliation of movement in net funds
At 1 January 2004 Cash flow At 30 June 2004
(audited) (unaudited) (unaudited)
£'000 £'000 £'000
Cash at bank and in hand 156 (131) 25
Cash on short term deposit 5,905 (23) 5,882
Net funds 6,061 (154) 5,907
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR USONRSURWURR
|
