Interim Results


 

TIDMCIG 
 
RNS Number : 0015H 
Critical Information Group 
11 February 2010 
 

 
+----------------+ 
|   Operating    | 
|    review      | 
|      for       | 
|    period      | 
|      from      | 
| incorporation  | 
|   on 18 May    | 
|  2009 to 31    | 
| December 2009  | 
+----------------+ 
| Chairman's     | 
| statement      | 
+----------------+ 
| It has         | 
| been           | 
| an             | 
| active         | 
| and            | 
| exciting       | 
| period         | 
| for            | 
| Critical       | 
| Information    | 
| Group plc      | 
| ("CIG" or      | 
| "the           | 
| Company").     | 
| Having         | 
| established    | 
| the            | 
| business,      | 
| gained         | 
| Admission      | 
| of the         | 
| Company to     | 
| AIM,           | 
| attracted a    | 
| select         | 
| group of       | 
| institutional  | 
| investors,     | 
| developed a    | 
| network of     | 
| advisers and   | 
| potential      | 
| sources of     | 
| bank finance,  | 
| we quickly     | 
| investigated   | 
| and in some    | 
| cases          | 
| approached     | 
| potential      | 
| acquisition    | 
| targets in     | 
| line with our  | 
| strategy.      | 
+----------------+ 
|                | 
+----------------+ 
| Review         | 
| of             | 
| operations     | 
+----------------+ 
| CIG            | 
| was            | 
| established    | 
| to acquire     | 
| public or      | 
| private B2B    | 
| media          | 
| companies      | 
| and            | 
| businesses     | 
| which in       | 
| our Board's    | 
| opinion        | 
| have the       | 
| potential      | 
| for            | 
| operational    | 
| improvement    | 
| and would      | 
| benefit        | 
| from           | 
| consolidation. | 
| The positive   | 
| response to    | 
| our flotation  | 
| combined with  | 
| the calibre of | 
| CIG's          | 
| financial      | 
| backers has    | 
| opened a       | 
| number of      | 
| potential      | 
| opportunities  | 
| for the        | 
| Company, many  | 
| of which       | 
| remain active. | 
| As an          | 
| illustration,  | 
| in the first   | 
| week following | 
| our IPO we     | 
| initiated      | 
| discussions    | 
| with owners    | 
| of, or         | 
| significant    | 
| investors in,  | 
| three major    | 
| acquisition    | 
| targets.       | 
| Following      | 
| initial due    | 
| diligence we   | 
| subsequently   | 
| submitted      | 
| conditional    | 
| offers or      | 
| non-binding    | 
| approaches to  | 
| two of them.   | 
| Currently, the | 
| Company has a  | 
| number of      | 
| target         | 
| opportunities  | 
| which we       | 
| continue to    | 
| monitor and    | 
| engage with,   | 
| as             | 
| appropriate.   | 
| CIG offers a   | 
| clear strategy | 
| and an         | 
| experienced    | 
| management     | 
| team to        | 
| implement this | 
| strategy. Our  | 
| experience     | 
| includes       | 
| restructuring  | 
| target         | 
| companies,     | 
| buying and     | 
| building       | 
| businesses and | 
| delivering the | 
| benefits       | 
| associated     | 
| with           | 
| integrating    | 
| assets into a  | 
| larger entity. | 
| All targets    | 
| are            | 
| financially    | 
| assessed using | 
| two cashflow   | 
| based          | 
| evaluation     | 
| methods; NPV   | 
| of future      | 
| cashflows and  | 
| simple         | 
| payback.  Our  | 
| first          | 
| acquisitions   | 
| will ideally   | 
| offer good     | 
| market         | 
| positions,     | 
| brand          | 
| franchise and  | 
| a spread of    | 
| operations to  | 
| provide broad  | 
| market access  | 
| together with  | 
| the necessary  | 
| infrastructure | 
| to allow       | 
| timely         | 
| integration of | 
| acquisitions   | 
| and scale to   | 
| support strong | 
| organic        | 
| growth.        | 
| Although we    | 
| have been very | 
| active over    | 
| the period we  | 
| have continued | 
| to maintain a  | 
| strong focus   | 
| on cost        | 
| control.  This | 
| has kept our   | 
| administrative | 
| expenses to    | 
| GBP50,000 in   | 
| the period,    | 
| the bulk of    | 
| which relate   | 
| to             | 
| professional   | 
| and compliance | 
| costs.  The    | 
| executive      | 
| directors will | 
| not draw a     | 
| salary until   | 
| completion of  | 
| our first      | 
| deal, and they | 
| are not        | 
| entitled to    | 
| any benefits   | 
| in kind. The   | 
| approach to    | 
| Centaur Media  | 
| plc is shown   | 
| separately and | 
| cost           | 
| GBP114,000 and | 
| is disclosed   | 
| in note 5.     | 
| The AIM        | 
| admission      | 
| costs were     | 
| GBP155,000 and | 
| were charged   | 
| against the    | 
| Share Premium  | 
| Account.       | 
| While many     | 
| companies are  | 
| reporting that | 
| conditions     | 
| have           | 
| stabilised in  | 
| our target     | 
| markets in     | 
| recent months, | 
| they still     | 
| face many of   | 
| the same       | 
| concerns we    | 
| identified at  | 
| the time of    | 
| our IPO last   | 
| June;          | 
| challenging    | 
| market         | 
| conditions,    | 
| business       | 
| contraction,   | 
| over leverage, | 
| lack of        | 
| liquidity for  | 
| smaller listed | 
| companies,     | 
| limited M&A    | 
| and restricted | 
| access to debt | 
| finance. The   | 
| biggest change | 
| that this      | 
| stabilisation  | 
| has presented  | 
| us with over   | 
| the last few   | 
| months has     | 
| been potential | 
| targets        | 
| factoring a    | 
| return to      | 
| growth into    | 
| their price    | 
| expectations   | 
| for their      | 
| businesses. In | 
| many cases     | 
| this forecast  | 
| return to      | 
| growth has not | 
| yet been       | 
| demonstrated.  | 
| We therefore   | 
| confidently    | 
| believe a      | 
| number of      | 
| opportunities  | 
| remain and     | 
| will continue  | 
| to pursue      | 
| them. As       | 
| demonstrated   | 
| by our actions | 
| during this    | 
| period, we     | 
| will not       | 
| overpay for    | 
| assets and we  | 
| will invest    | 
| only where we  | 
| see an         | 
| opportunity    | 
| for value      | 
| creation for   | 
| all of our     | 
| shareholders.  | 
+----------------+ 
| The            | 
| future         | 
+----------------+ 
|             We | 
|       continue | 
|          to be | 
|           very | 
|         active | 
|        and are | 
|        working | 
|           on a | 
|         number | 
|             of | 
|      projects, | 
|        however | 
|      there can | 
|          be no | 
|      certainty | 
|           that | 
|      these may | 
|        lead to | 
|         formal | 
|     acceptable | 
|      offers or | 
|         indeed | 
|     successful | 
|      outcomes. | 
|             As | 
|      described | 
|       above we | 
|        believe | 
|      there are | 
|  opportunities | 
|   available to | 
|    the Company | 
|  with many B2B | 
|     businesses | 
|          still | 
|   reporting an | 
|      uncertain | 
|       economic | 
|    climate for | 
|  2010. We have | 
|     ample cash | 
|    balances to | 
|    support our | 
|       business | 
|  activities, a | 
|     supportive | 
|  investor base | 
|  and potential | 
|      access to | 
|   debt finance | 
|      and a low | 
|     underlying | 
|    operational | 
|     cost base. | 
|        David J | 
|         Smith, | 
|       Chairman | 
+----------------+ 
 
+--------+-------------------------------------+ 
|        | Financial                           | 
|        | Review                              | 
+--------+-------------------------------------+ 
|        | The                                 | 
|        | Company                             | 
|        | raised                              | 
|        | GBP2,850,000                        | 
|        | net of                              | 
|        | expenses                            | 
|        | (GBP3,005,000                       | 
|        | before                              | 
|        | expenses) on                        | 
|        | its admission                       | 
|        | to AIM on 25                        | 
|        | June 2009.                          | 
|        | During the                          | 
|        | period ended                        | 
|        | 31 December                         | 
|        | 2009 CIG made                       | 
|        | an operating                        | 
|        | loss of                             | 
|        | GBP164,000 of                       | 
|        | which                               | 
|        | GBP114,000                          | 
|        | related to                          | 
|        | advisory                            | 
|        | costs                               | 
|        | associated                          | 
|        | with the                            | 
|        | approach to                         | 
|        | Centaur Media                       | 
|        | plc.                                | 
|        | Interest                            | 
|        | rates                               | 
|        | available for                       | 
|        | money on                            | 
|        | short term                          | 
|        | deposit                             | 
|        | remain at                           | 
|        | historic lows                       | 
|        | and the                             | 
|        | Company                             | 
|        | received                            | 
|        | GBP3,000 in                         | 
|        | interest                            | 
|        | during the                          | 
|        | period.                             | 
|        | Due to the                          |
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