REG - Ebiquity PLC - Final Results <Origin Href="QuoteRef">EBQ.L</Origin> - Part 3
06/09/2014 16:39
- Part 3: For the preceding part double click ID:nRSP4438Mb
Bank borrowings£'000 Finance lease liabilities£'000 Interest rate swaps£'000 Contingent deferred consideration£'000 Total£'000
At 1 May 2012 18,059 328 39 8,102 26,528
Recognised on acquisition - - - 4,436 4,436
Additions - 111 - - 111
Utilised - (157) - (6,382) (6,539)
Released to the Income Statement 75 - - (575) (500)
Charged to reserves - - 105 - 105
Borrowings 6,456 - - - 6,456
Repayments (2,309) - - - (2,309)
Foreign exchange 136 1 1 76 214
At 1 May 2013 22,417 283 145 5,657 28,502
Recognised on acquisition - - - 7,085 7,085
Additions - 133 - - 133
Utilised - (202) - (5,401) (5,603)
Charged to the Income Statement 75 - - 1,603 1,678
Charged to reserves - - (93) - (93)
Borrowings 10,766 - - - 10,766
Repayments (3,937) - - - (3,937)
Foreign exchange released to the Income Statement (143) - - (105) (248)
Foreign exchange released to reserves - - - (176) (176)
At 30 April 2014 29,178 214 52 8,663 38,107
A currency analysis for the bank borrowings is shown below:
30 April 2014£'000 30 April 2013£'000
Pounds Sterling 26,052 18,949
US Dollar 1,068 1,360
Euros 2,058 2,108
Total bank borrowings 29,178 22,417
As at 30 April 2014, all bank borrowings were held jointly with Bank of
Ireland and Barclays Bank. The facility comprises an amortising term loan of
£15,000,000 (of which £9,798,000 remains outstanding at 30 April 2014 (2013:
£12,168,000)), and a revolving credit facility of £15,000,000 (of which
£13,959,000 was drawn down at 30 April 2014 (2013: £10,468,000)), both with a
maturity date of 9 March 2016. £3,917,000 of the term loan is being repaid on
a quarterly basis over the next 3 years, with the remainder repayable on the
maturity of the facility. Loan arrangement fees of £143,000 (2013: £219,000)
are offset against the term loan, and are being amortised over the period of
the loan.
In August 2013, the facilities were amended to include a further £6,000,000
term loan facility (of which £6,000,000 was drawn down at 30 April 2014) with
a maturity date of 9 March 2016. £1,726,000 of the additional drawn term loan
is being repaid on a quarterly basis until 31 January 2016, with the remainder
payable on the maturity of the facility.
The facility bears variable interest of LIBOR plus a margin of 2.75%. The
margin rate may be lowered from April 2014 to 2.50% depending on the Group's
net debt to EBITDA ratio. The rate may be further lowered to 2.25% from April
2015 and 2.00% from April 2016.
The undrawn amount of the revolving credit facility is liable to a fee of 45%
of the prevailing margin. The Group may elect to prepay all or part of the
outstanding loan subject to a break fee, by giving 5 business days' notice.
All amounts owing to the bank are guaranteed by way of fixed and floating
charges over the current and future assets of the Group. As such, a composite
guarantee has been given by all significant subsidiary companies.
The Group holds floating to fixed interest rate swaps against 100% of its
sterling and US dollar denominated term loan for the period from May 2012 to
April 2015. These instruments are held at fair value at 30 April 2014.
Subsequent to year end we refinanced our banking facilities with Barclays and
Royal Bank of Scotland ("RBS"). Refer to note 11 for more details.
Contingent deferred consideration represents additional amounts that are
expected to be payable for acquisitions made by the Group and is held at fair
value at the Balance Sheet date. All amounts are expected to be fully paid by
August 2017.
All finance lease liabilities fall due within five years. The minimum lease
payments and present value of the finance leases are as follows:
Minimum lease payments
Year ended30 April 2014 Year ended 30 April 2013
£'000 £'000
Amounts due:
Within one year 203 145
Between one and five years 27 138
230 283
Less: finance charges allocated to future periods (16) -
Present value of lease obligations 214 283
The minimum lease payments approximate the present value of minimum lease
payments.
9. Cash generated from operations
Year ended Year ended
30 April 2014 30 April 2013
£'000 £'000
Profit before taxation 3,440 6,556
Adjustments for:
Depreciation 1,102 1,026
Amortisation (note 7) 2,200 2,575
Loss/(profit) on disposal - 42
Unrealised foreign exchange loss /(gain) 814 (36)
Share option charges (note 3) 337 267
Finance income (15) (13)
Finance expenses 1,206 988
Share of profit of associates (19) (26)
Contingent deferred consideration revaluations 1,603 (575)
10,668 10,804
Increase in trade and other receivables (3,467) (762)
Decrease in trade and other payables (692) (2,100)
Movement in provisions 290 (416)
Cash generated from operations 6,799 7,526
10. Acquisitions
STRATIGENT LLC ("Stratigent")
On 19 August 2013, the Group acquired 100% of Stratigent LLC, a company
incorporated in the United States of America. The initial cash consideration
was $4,217,000 (£2,700,000). Additional consideration is payable dependent on
future performance during the periods to December 2013, April 2014, April 2015
and April 2016 and will be paid in cash. The maximum total consideration
payable is $8,780,000 (£5,621,000).
Stratigent contributed £2,109,000 to revenue and £483,000 to profit before tax
for the period between the date of acquisition and the period end.
The carrying value and the fair value of the net assets at the date of
acquisition were as follows:
Carrying value Recognised on acquisition
£'000 £'000
Customer relationships - 1,192
Property, plant and equipment 24 24
Trade and other receivables 483 483
Cash and cash equivalents 146 146
Trade and other payables (277) (367)
Deferred tax liability - (488)
Net assets acquired 376 990
Goodwill arising on acquisition 4,131
5,121
The fair value of trade and other receivables includes trade receivables with
a fair value and gross contractual value of £450,000.
The goodwill is attributable to the assembled workforce, expected synergies
and other intangible assets, which do not qualify for separate recognition.
Purchase consideration:
£'000
Cash 2,700
Contingent deferred consideration 2,421
Total purchase consideration 5,121
The fair value of contingent deferred consideration payable is based on EBIT
for the year ended 31 December 2013 and revenue growth and operating profit
margins for the years ended 30 April 2014, 30 April 2015 and 30 April 2016.
The potential range of future payments that Ebiquity plc could be required to
make under the contingent consideration arrangement is between £nil and
£2,921,000 and will be paid in cash. All contingent deferred consideration
payments are expected to be paid by August 2016.
CHINA MEDIA CONSULTING GROUP ("CMCG")
On 15 January 2014, the Group acquired the entire issued share capital of
China Media Consulting Group Limited, the Hong Kong incorporated holding
company of the CMCG group ("CMCG"). CMCG was acquired for an initial cash
consideration of HK$20m (approximately £1.6m), and the maximum total
consideration is up to HK$85m (approximately £6.6m), with earn out payments
payable in cash, depending on the performance of CMCG in the five financial
years ending 30 April 2017.
CMCG contributed £605,000 to revenue and £427,000 to profit before tax for the
period between the date of acquisition and the period end.
The carrying value and the fair value of the net assets at the date of
acquisition were as follows:
Carrying value Recognised on acquisition
£'000 £'000
Customer relationships - 1,781
Property, plant and equipment 14 14
Trade and other receivables 407 407
Cash and cash equivalents 324 324
Trade and other payables (96) (98)
Deferred tax liability - (445)
Net assets acquired 649 1,983
Goodwill arising on acquisition 4,257
6,240
The fair value of trade and other receivables includes trade receivables with
a fair value and gross contractual value of £214,000.
The goodwill is attributable to the assembled workforce, expected synergies
and other intangible assets, which do not qualify for separate recognition.
Purchase consideration:
£'000
Cash 1,576
Contingent deferred consideration 4,664
Total purchase consideration 6,240
The fair value of contingent deferred consideration payable is based on PBT
for the years ended 30 April 2013, 30 April 2014, 30 April 2015, 30 April 2016
and 30 April 2017. The potential range of future payments that Ebiquity plc
could be required to make under the contingent consideration arrangement is
between £nil and £4,985,000 and will be paid in cash. All contingent deferred
consideration payments are expected to be paid by August 2017.
TRANSACTIONS WITH NON CONTROLLING INTERESTS
On 19 July 2013, the Group acquired the remaining 8.3% in its subsidiary
undertaking, Ebiquity SAS, for cash consideration of E90,000 (£78,000).
During April 2014, the two French subsidiaries (Ebiquity SAS which was 100%
owned and FLE France SAS which was 65% owned) were merged. As a part of the
merger the Group acquired part of the FLE France SAS minority shareholding
with the consideration being satisfied by the issue of 102,981 new ordinary
shares of 25p each in Ebiquity plc. The Group now owns 80% of the newly merged
French business.
If all of the above transactions had been completed on 1 May 2013, Group
revenue would have been £70,129,000 and Group operating profit before
highlighted items would have been £11,584,000, before any potential
synergistic benefits are taken into account.
None of the goodwill arising from the acquisitions in the year is expected to
be tax deductible.
11. Events after the reporting period
On 2 July 2014, the Group refinanced its banking facilities with Barclays and
Royal Bank of Scotland ("RBS") and on 7 July 2014 drew down on these new
facilities. The new committed facility, totalling £40.0m, comprises a term
loan of £10.0m (of which all was drawn on refinance) and an RCF of £30.0m (of
which £20.8m was drawn on refinance). Both the term loan and the RCF have a
maturity date of 2 July 2018. The £10.0m term loan is being repaid on a
quarterly basis to maturity, and the drawn RCF and any further drawings under
the RCF are repayable on maturity of the facility. The facility may be used
for deferred consideration payments on past acquisitions, to fund future
potential acquisitions, and for general working capital requirements.
Subsequent to year end the 5% minority shareholder of the Group's subsidiary
undertaking, Billetts America LLC, exercised their option to increase their
shareholding to 15%. The Group then acquired the remaining 15% in Billetts
America LLC from the minority shareholder. The consideration payable for these
interests is dependent on the performance of the business of Billetts America
LLC during the three financial years ending 30 April 2015.
12.Financial Information
The financial information included in this report does not amount to full
financial statements within the meaning of Section 434 of Companies Act 2006.
The financial information has been extracted from the Group's Annual Report
and financial statements for the year ended 30 April 2014, on which an
unqualified report has been made by the Company's auditors,
PricewaterhouseCoopers LLP.
Financial statements for the year ended 30 April 2013 have been delivered to
the Registrar of Companies; the report of the auditors on those accounts was
unqualified and did not contain a statement under Section 498 of the Companies
Act 2006. The 2014 statutory accounts are expected to be published on 6 August
2014.
This information is provided by RNS
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