REG - Ebiquity PLC - Interim Results <Origin Href="QuoteRef">EBQ.L</Origin> - Part 2
28/09/2016 07:06
- Part 2: For the preceding part double click ID:nRSb0069La
(64) 17 31
Other administrative expenses (548) (122) (356)
Operating profit/(loss) before highlighted items 8,565 4,457 (3)
Highlighted items (note 3) (3,354) (1,369) (6,656)
Operating profit 5,211 3,088 (6,659)
Net finance costs (613) (598) (800)
Share of profit of associates - 4 13
Profit/(loss) before tax 4,598 2,494 (7,446)
Unallocated costs comprise central costs that are not considered attributable
to the segments.
3. Highlighted items
Highlighted items comprise items which are highlighted in the income statement
because separate disclosure is considered relevant in understanding the
underlying performance of the business.
Unaudited 6 months ended30 June 2016 Unaudited 6 months ended31 October 2015 Audited8 months ended31 December 2015
£'000s £'000s £'000s
Recurring:
Share option charge 203 294 431
Amortisation of purchased intangibles 907 1,019 1,327
1,110 1,313 1,758
Non-recurring:
Deferred consideration adjustments 1,576 (462) (32)
Acquisition and integration costs 668 518 565
Impairment costs - - 4,365
2,244 56 4,898
Total highlighted items before tax 3,354 1,369 6,656
Taxation credit (256) (311) (756)
Total highlighted items after tax 3,098 1,058 5,900
Share option charges include the non-cash IFRS 2 charge (£320,000) along with
the cash element in relation to the exercising of share options (£117,000
credit).
Amortisation of purchased intangibles relates to acquisitions made in the
current financial year of £9,000 and to acquisitions made in prior years of
£898,000.
Adjustments to the fair value of deferred consideration amount to £1,001,000
(October 2015: £504,000 credit) resulting primarily from an upward revision of
deferred consideration in relation to two acquisitions and discounting all
deferred consideration balances to net present value, along with the related
foreign exchange impacts (£575,000; October 2015: £42,000).
Acquisition costs represent professional fees incurred in relation to
acquisitions (£20,000). Integration costs include certain one-off costs
incurred whilst integrating the acquisitions made in the prior and current
financial years including severance costs arising from the restructure of
senior management following these acquisitions (£379,000). Also included are
transition costs in relation to the new Group CEO (£276,000).
4. Dividends
Unaudited 6 months ended30 June 2016 Unaudited 6 months ended31 October 2015 Audited8 months ended31 December 2015
£'000s £'000s £'000s
Dividends to equity holders of the parent
Ordinary final dividend for the year ended 30 April 2015 of 0.4p per share - 291 291
Total - 291 291
An interim dividend of 0.4p per share is being proposed (October 2015: nil).
These financial statements do not reflect this proposed dividend payable.
5. Earnings per share
The calculation of basic and diluted earnings per share is based on the
following data:
Unaudited6 months ended 30 June 2016 Unaudited6 months ended 31 October 2015 Audited8 months ended 31 December 2015
£'000s £'000s £'000s
Earnings for the purpose of basic earnings per share being net profit attributable to equity holders of the parent 2,377 1,631 (6,221)
Adjustments:
Impact of highlighted items (net of tax)1 3,086 1,047 5,885
Earnings for the purpose of underlying earnings per share 5,463 2,678 (336)
Number of shares:
Weighted average number of shares during the period
- Basic 77,172,354 76,914,760 76,976,240
-Dilutive effect of share options 2,355,361 2,025,736 1,993,033
79,527,715 78,940,496 78,969,273
Basic earnings per share 3.08p 2.12p (8.08)p
Diluted earnings per share 2.99p 2.07p (8.08)p
Underlying basic earnings per share 7.08p 3.48p (0.44)p
Underlying diluted earnings per share 6.87p 3.39p (0.43)p
1 Highlighted items (see note 3), stated net of their total tax and
non-controlling interest impact.
It is assumed that $1,046,000 (£734,000) of contingent deferred consideration
will be settled in shares and has a dilutive impact of 276,786 shares. It is
assumed that all remaining contingent deferred consideration will be settled
in cash and therefore has no dilutive effect.
6. Goodwill
£'000
Cost
At 1 May 2015 58,096
Adjustments in respect of a pre-acquisition period (181)
Foreign exchange differences (500)
At 31 October 2015 57,415
Adjustments in respect of a pre-acquisition period 4
Foreign exchange differences 537
At 31 December 2015 57,956
Acquisitions (note 11) 407
Foreign exchange differences 1,861
At 30 June 2016 60,224
Accumulated impairment
At 1 May 2015 -
At 31 October 2015 -
Impairment (3,129)
At 31 December 2015 (3,129)
At 30 June 2016 (3,129)
Net book value
At 30 June 2016 57,095
At 31 October 2015 57,415
At 31 December 2015 54,827
7. Other intangible assets
Capitalised development costs Computer software Purchased intangible assets Total intangible assets
£'000s £'000s £'000s £'000s
Cost
At 1 January 2016 3,638 2,383 23,299 29,320
Additions 341 352 - 693
Acquisitions (note 11) - - 225 225
Disposals - (245) - (245)
Foreign exchange 39 103 989 1,131
At 30 June 2016 4,018 2,593 24,513 31,124
Amortisation
At 1 January 2016 (1,544) (1,320) (12,929) (15,793)
Charge for the period (123) (159) (907) (1,189)
Disposals - 245 - 245
Foreign exchange (1) (87) (426) (514)
At 30 June 2016 (1,668) (1,321) (14,262) (17,251)
Net book value
At 30 June 2016 2,350 1,272 10,251 13,873
At 31 October 2015 2,204 1,085 11,074 14,363
At 31 December 2015 2,094 1,063 10,370 13,527
13,527
The capitalised development costs are internally generated.
Purchased intangible assets consist principally of customer relationships with
a typical useful life of 10 years.
Amortisation is charged within administrative expenses so as to write off the
cost of the intangible assets over their estimated useful lives. The
amortisation of purchased intangible assets is included as a highlighted
administrative expense.
8. Cash, cash equivalents and bank overdrafts
Cash, cash equivalents and bank overdrafts include the following for the
purposes of the cash flow statement:
30 June 2016 31 October 2015 31 December 2015
£'000 £'000 £'000
Cash and cash equivalents 8,621 6,808 8,755
Bank overdraft (note 9) (2,389) (1,978) (2,391)
Cash, cash equivalents and bank overdrafts 6,232 4,830 6,364
9. Financial liabilities
30 June 2016 31 October 2015 31 December 2015
£'000 £'000 £'000
Current
Bank overdraft 2,389 1,978 2,391
Bank borrowings 2,411 2,410 2,410
Finance lease liabilities 4 4 4
Derivative financial instrument - currency swaps 200 - -
Contingent deferred consideration 5,372 3,044 3,422
10,376 7,436 8,227
Non-current
Bank borrowings 31,778 33,251 32,615
Finance lease liabilities 4 8 9
Contingent deferred consideration 1,655 1,381 1,431
33,437 34,640 34,055
Total financial liabilities 43,813 42,076 42,282
All bank borrowings are held jointly with Barclays and Royal Bank of Scotland
('RBS'). The committed facility, totalling £40,000,000, comprises a term loan
of £10,000,000 (of which £5,000,000 remains outstanding at 30 June 2016 (31
October 2015: £6,875,000)), and a revolving credit facility ('RCF') of
£30,000,000 (of which £29,368,000 was drawn down at 30 June 2016 (31 October
2015: £29,026,000)). Both the term loan and the RCF have a maturity date of 2
July 2018. The £10,000,000 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.
Loan arrangement fees of £180,000 (31 October 2015: £240,000) are offset
against the term loan, and are being amortised over the period of the loan.
The facility bears variable interest of LIBOR plus a margin of 2.50%. The
margin rate is able to be lowered each quarter end from December 2015
depending on the Group's net debt to EBITDA ratio.
The undrawn amount of the revolving credit facility is liable to a fee of 40%
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 banks 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 in the UK,
USA and Germany.
The Group holds forward currency contracts against the US Dollar and Euro for
the period from March 2016 to December 2016. These instruments are held at
fair value at 30 June 2016.
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 Statement of Financial Position date. All amounts are expected to
be fully paid by June 2021.
10. Cash generated from operations
Unaudited6 months ended 30 June 2016 Unaudited6 months ended 31 October 2015 Audited8 months ended 31 December 2015
£'000 £'000 £'000
Profit/(loss) before taxation 4,598 2,494 (7,446)
Adjustments for:
Depreciation 629 561 770
Amortisation (note 7) 1,189 1,289 1,711
Impairment of goodwill - - 3,129
Impairment of intangible assets - - 773
Loss on disposal 1 - 18
Unrealised foreign exchange loss/(gain) (1,168) 384 (95)
Share option charges (note 3) 320 132 228
Finance income (1) (10) (13)
Finance expenses 614 608 813
Share of profit of associates - (4) (13)
Contingent deferred consideration revaluations 1,576 (462) (32)
7,758 4,992 (157)
(Increase)/decrease in trade and other receivables (6,949) 945 5,549
Increase/(decrease) in trade and other payables 1,410 (3,314) (333)
Movement in provisions (88) (37) (31)
Cash generated from operations 2,131 2,586 5,028
11. Acquisitions
Fairbrother Marsh Company Limited ('FMC')
On 11 March 2016 the Group acquired the outstanding 50% interest in its Irish
media consultancy associate, Fairbrother Marsh Company Limited ('FMC'). The
50% interest in FMC was acquired for an initial cash consideration of EUR
150,000 (£118,000). The maximum total consideration is up to EUR 2,000,000
(£1,559,000), payable in cash, depending on the performance of the FMC
business during the period ending 31 December 2020.
FMC contributed £234,000 to revenue and £53,000 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 - 142
Brands - 83
Property, plant and equipment 10 10
Trade and other receivables 140 140
Cash and cash equivalents 162 162
Trade and other payables (250) (258)
Deferred tax liability - (28)
Net assets acquired 62 251
Fair value of 50% previously held equity interest (40)
Goodwill arising on acquisition 407
618
The fair value of trade and other receivables includes trade receivables with
a fair value and gross contractual value of £94,000.
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 118
Net present value of contingent deferred consideration 500
Total purchase consideration 618
The fair value of contingent deferred consideration payable is based on EBIT
for the years ended 31 December 2019 and 31 December 2020 with stage payments
each year from 2017 onwards based on 2 year averages. The potential range of
future payments that Ebiquity plc could be required to make under the
contingent consideration arrangement is between £nil and £1,441,000 and will
be paid in cash. All contingent deferred consideration payments are expected
to be paid by June 2021.
Acquisition costs of £20,000 have been recognised in administrative expenses -
highlighted items.
If the above transaction had been completed on 1 January 2016, Group revenue
would have been £42,307,000 and Group operating profit before highlighted
items would have been £8,534,000.
None of the goodwill arising from the acquisitions in the year is expected to
be tax deductible.
INDEPENDENT REVIEW REPORT TO EBIQUITY PLC
Report on the consolidated interim results
Our conclusion
We have reviewed Ebiquity plc's consolidated interim results (the "interim
financial statements") in the interim results of Ebiquity plc for the 6 month
period ended 30 June 2016. Based on our review, nothing has come to our
attention that causes us to believe that the interim financial statements are
not prepared, in all material respects, in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the AIM Rules for Companies.
What we have reviewed
The interim financial statements comprise:
· the consolidated statement of financial position as at 30 June 2016;
· the consolidated income statement and consolidated statement of
comprehensive income for the period then ended;
· the consolidated statement of cash flows for the period then ended;
· the consolidated statement of changes in equity for the period then
ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the interim results have been
prepared in accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the AIM Rules for
Companies.
As disclosed in note 1 to the interim financial statements, the financial
reporting framework that has been applied in the preparation of the full
annual financial statements of the Group is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The interim results, including the interim financial statements, is the
responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the interim results in accordance with the AIM Rules
for Companies which require that the financial information must be presented
and prepared in a form consistent with that which will be adopted in the
company's annual financial statements.
Our responsibility is to express a conclusion on the interim financial
statements in the interim results based on our review. This report, including
the conclusion, has been prepared for and only for the company for the purpose
of complying with the AIM Rules for Companies and for no other purpose. We do
not, in giving this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent in
writing.
What a review of interim financial statements involves
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and, consequently,
does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
We have read the other information contained in the interim results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
27 September 2016
a) The maintenance and integrity of the Ebiquity plc website is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept
no responsibility for any changes that may have occurred to the interim
financial statements since they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
This information is provided by RNS
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