April 2002 Interim Results Announcement

10/04/2002

Net revenue was £17.36 million in half year to 31st January 2002 compared with £20.31 million in first half to 31st January 2001

Pre exceptional PBT from continuing operations of £522k (2001: £1,216k)

Net debt position of £1.071 million at 31st January 2002 in line with end of year position and has been considerably reduced since end of half as cash flow has strengthened

IBM product pr contract was commenced successfully in fourteen countries by Text 100. Recent new business wins include Sun Microsystems and Veritas (Bite Communications), TotalFinaElf (AUGUST.ONE) and WH Smith Book Awards and Umbro.com (Joe Public Relations).

The Group has made a stronger start to the second half, benefiting from reduced overheads, the elimination of loss-making subsidiaries and the impact of major new business wins – Text 100’s US business is performing especially well.

The Board is cautiously optimistic that the outcome for the full year will be satisfactory and that once the tentative recovery in North America becomes established and spreads to Europe and beyond, the Group will return to organic revenue growth and improved profitability.
For further information, contact:

Tom Lewis, Chairman, OneMonday Group plc

07802 609661 David Dewhurst, Finance Director
020 8996 4154 Nick Denton, Hogarth Partnership
020 7357 9477 Chairman’s Statement

I am pleased to report that OneMonday Group continues to experience a slow but steady recovery from the depths of the IT industry slump that caused its specialist PR operations such difficulties over the course of the calendar year 2001. The Group returned to profitability, in comparison with the loss in the previous six month period.

 

In the six months to 31 January 2002, the Group performed slightly better than expected, producing a profit before tax of £230k on turnover, which, at £19.45m was down 16% on the comparative period of last year. When adjusted for discontinued activities (£186k) and further restructuring costs in continuing businesses (£106k), this profit before tax rises to £522k. While the profit before tax compares unfavourably with the £1.15m recorded in the corresponding period last year (prior to the impact of the technology slump), the improvement in the Group’s trading position becomes apparent when it is compared to the loss before tax of £819k in the six months to 31 July 2001. Adjusted basic earnings per share fell to 0.1p. The Board is not proposing to pay an interim dividend at this stage, but will consider a final dividend at the time of finalising the full year results in October.

 

The improvement in the Group’s profitability is very much as predicted at the time of the full-year figures in October 2001, and reconfirmed at the Group’s AGM in January of this year. The global market for the Group’s services remains depressed, though there are early signs of a recovery apparent in the US. Two of the Group’s subsidiaries are significantly outperforming their markets, Text 100 in the US and Bite Communications in the UK, while trading generally remains patchy in Europe and depressed in Asia Pacific. This has led to some additional reorganisation costs, including the closure of EVUS, a business serving the needs of the emerging technologies market, and some further adjustments to staffing levels. On the other hand, Bite Communications has opened its second overseas operation, in Stockholm.

During the last six months, Text 100 commenced work for IBM in fourteen countries around the world but in order to accommodate this it had to end its relationship with a number of significant clients. Bite Communications continues to perform well, playing an important part in the roll-out of Apple’s new product line in Europe, while also securing a number of new clients including Sun Microsystems and Veritas. AUGUST.ONE has helped Microsoft achieve a successful launch of its Windows XP operating system and made further progress in extending its reach outside technology with several impressive wins that include energy giant TotalFinaElf. Joe Public Relations has also continued to develop its consumer PR business with wins that include WH Smith Book Awards and Umbro.com. The strategies of AUGUST.ONE diversifying outside its core technology business and Joe Public Relations focusing on the consumer sector are enabling the Group to achieve some relief from the current difficult market conditions in the technology sector.

 

As predicted at the AGM in January, the Group has made a stronger start to the second half, benefiting from reduced overheads, the elimination of loss-making subsidiaries and the impact of some major new business wins. The Board is cautiously optimistic that the outcome for the full year will be satisfactory. I am also pleased with the Group’s net debt position which, at £1.1m was in line with the previous year-end position. Since 31 January cash flow has continued to improve and our net debt has been significantly reduced.

The technology slump has taken substantial capacity out of the PR industry, particularly in North America where some quite significant technology PR consultancies have been seriously weakened or ceased trading altogether. Given the continued emphasis on organic growth, the Group remains free of any deferred acquisition payments in cash or stock, and has the funding available to support its recovery. Looking ahead, the Board believes that once the tentative recovery in North America becomes established and spreads eastwards to Europe and beyond the Group will return to organic revenue growth and improved profitability.

On 8th April 2002 our largest client, IBM, issued an earnings warning. Whilst we have no reason to believe that this will affect our business, it seems prudent to highlight this event, which could potentially add some uncertainty to our outlook.

 

Tom Lewis, Chairman