REG - Ebiquity PLC - Interim Results <Origin Href="QuoteRef">EBQ.L</Origin> - Part 2
26/09/2017 07:06
- Part 2: For the preceding part double click ID:nRSZ7664Ra
Total highlighted items after tax 2,636 3,098
Share option charges include the non-cash IFRS 2 charge £319,000 (June 2016:
£320,000) along with the cash element in relation to the exercising of share
options £45,000 (June 2016: £117,000 credit).
Amortisation of purchased intangibles relates to acquisitions made in prior
years £963,000 (June 2016: £907,000).
Adjustments to the fair value of deferred consideration amount to £449,000
(June 2016: £1,001,000) resulting from an upward revision of deferred
consideration in relation to acquisitions from prior years and discounting all
deferred consideration balances to net present value, along with the related
foreign exchange £77,000 credit (June 2016: £575,000 debit).
Integration costs include certain one-off costs incurred whilst integrating
the acquisitions made in prior years including severance costs arising from
the restructure of senior management following these acquisitions totalling
£784,000 (June 2016: £582,000). Also included are costs for the exploration of
strategic opportunities for the Group totalling £517,000 (June 2016:
£86,000).
4. Dividends
A dividend of £474,000 (0.65p per share) was paid in respect to the year ended
31 December 2016.
5. Earnings per share
The calculation of basic and diluted earnings per share is based on the
following data:
Unaudited6 months ended 30 June 2017 Unaudited6 month ended 30 June 2016
£'000s £'000s
Earnings for the purpose of basic earnings per share being net profit attributable to equity holders of the parent 1,828 2,377
Adjustments:
Impact of highlighted items (net of tax)2 2,623 3,086
Earnings for the purpose of underlying earnings per share 4,451 5,463
Number of shares:
Weighted average number of shares during the period
- Basic 77,202,758 77,172,354
-Dilutive effect of share options 2,961,788 2,355,361
80,164,546 79,527,715
Basic earnings per share 2.37p 3.08p
Diluted earnings per share 2.28p 2.99p
Underlying basic earnings per share 5.77p 7.08p
Underlying diluted earnings per share 5.55p 6.87p
2 Highlighted items (see note 3), stated net of their total tax and
non-controlling interest impact.
6. Goodwill
£'000
Cost
At 1 January 2017 61,174
Foreign exchange differences (182)
At 30 June 2017 60,992
Accumulated impairment
At 1 January 2017 (3,129)
Impairment -
At 30 June 2017 (3,129)
Net book value
At 30 June 2017 57,863
At 31 December 2016 58,045
7. Other intangible assets
Capitalised Work-in-Progress costs Capitalised development costs Computer software Purchased intangible assets Total intangible assets
£'000s £'000s £'000s £'000s £'000s
Cost
At 1 January 2017 1,551 2,793 3,051 24,938 32,333
Additions 151 385 321 - 857
Disposals - - - - -
Transfer to capitalised development costs (1,155) 1,155 - - -
Foreign exchange - 6 10 7 23
At 30 June 2017 547 4,339 3,382 24,945 33,213
Amortisation
At 1 January 2017 - (1,376) (1,517) (15,406) (18,299)
Charge for the period - (240) (185) (963) (1,388)
Disposals - - - - -
Foreign exchange - - (8) (25) (33)
At 30 June 2017 - (1,616) (1,710) (16,394) (19,720)
Net book value
At 30 June 2017 547 2,723 1,672 8,551 13,493
At 31 December 2016 1,551 1,417 1,534 9,532 14,034
The capitalised development costs and work-in-progress costs are internally
generated intangible assets related to bespoke computer software and
technology developed by the Group's internal software development team.
Capitalised development costs have commenced amortising.
Purchased intangible assets consist principally of customer relationships with
a typical useful life of 10 years. Amortisation for purchased intangible
assets is included in highlighted items.
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 2017 31 December 2016
£'000 £'000
Cash and cash equivalents 7,619 6,662
Bank overdraft (note 9) (2,392) (2,062)
Cash, cash equivalents and bank overdrafts 5,227 4,600
9. Financial liabilities
30 June 2017 31 December 2016
£'000 £'000
Current
Bank overdraft 2,392 2,062
Bank borrowings 1,785 2,410
Finance lease liabilities 4 4
Contingent deferred consideration 1,988 1,777
6,169 6,253
Non-current
Bank borrowings 29,625 30,205
Finance lease liabilities - 5
Contingent deferred consideration 303 238
29,928 30,448
Total financial liabilities 36,097 36,701
Contingent
Bank Bank Finance lease deferred
overdrafts borrowings liabilities consideration Total
£'000 £'000 £'000 £'000 £'000
At 1 January 2017 2,062 32,615 9 2,015 36,701
Additions 330 - - - 330
Paid - - (5) (96) (101)
Charged to the income statement - 45 - 413 458
Discounting charged to the income statement - - - 36 36
Repayments - (1,250) - - (1,250)
Foreign exchange released to the income statement - - - (77) (77)
At 30 June 2017 2,392 31,410 4 2,291 36,097
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 £2,500,000 remains outstanding at 30 June 2017) (31
December 2016: £3,750,000), and a revolving credit facility ('RCF') of
£30,000,000 (of which £29,000,000 was drawn down at 30 June 2017) (31 December
2016: £29,000,000). Both the term loan and the RCF have a maturity date of 2
July 2018. On 22 September, the Group extended the term of its RCF, with a new
maturity date of 30 June 2019. The terms of the extension, including
covenants, remain unchanged. 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 £90,000 (31 December 2016: £135,000) 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 2.25%. 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.
Contingent deferred consideration represents additional amounts that are
expected to be payable for acquisitions made by the Group in prior periods and
is held at fair value at the Statement of Financial Position date. During the
period, the Group settled its contingent deferred consideration for its 2015
acquisition of Media Value SL. The Group's remaining contingent deferred
consideration pertains to the acquisitions of its Chinese and Irish media
businesses, made in 2014 and 2016 respectively. All amounts are expected to be
fully paid by June 2021.
10. Fair Value Measurement
All of the Group's financial assets and liabilities are measured at amortised
cost, with the exception of the contingent deferred consideration payable,
which is held at fair value through profit and loss.
The following table provides an analysis of financial instruments that are
measured subsequent to initial recognition at fair value, grouped into Levels
1 to 3 based on the degree to which the fair value is observable:
· Level 1 fair value measurements are those derived from quoted prices in
active markets for identical assets or liabilities;
· Level 2 fair value measurements are those derived from inputs other than
quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly; and
· Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not based
on observable market data.
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
At 30 June 2017
Financial liabilities
Contingent deferred consideration - - 2,291 2,291
- - 2,291 2,291
At 30 June 2016
Financial liabilities
Contingent deferred consideration - - 5,372 5,372
- - 5,372 5,372
The fair value of the contingent deferred consideration is based on the EBIT
performance of the respective businesses over a designated future period of
time, as agreed at acquisition. As a result, the determination of the
contingent deferred consideration payable is based on management's best
estimate forecast results and therefore, actual consideration can vary.
Refer to Note 9 for a reconciliation of movements during the period.
11. Cash generated from operations
Unaudited6 months ended 30 June 2017 Unaudited6 months
ended 30 June 2016
£'000 £'000
Profit before taxation 3,215 4,598
Adjustments for:
Depreciation 550 629
Amortisation (note 7) 1,388 1,189
Loss on disposal - 1
Unrealised foreign exchange gain (252) (1,168)
Share option charges 319 320
Finance income (2) (1)
Finance expenses 511 614
Contingent deferred consideration 372 1,576
6,104 7,758
Increase in trade and other receivables (3,567) (6,949)
Increase in trade and other payables 2,279 1,410
Movement in provisions 193 (88)
Cash generated from operations 5,009 2,131
12. Contingent liabilities
The Group intends to purchase the remaining 20% ownership interest in the
Group's French business by the end of the calendar year.
13. Events subsequent to reporting date
On 1 September, the Group acquired the trade and assets of Digital Balance Pty
("Digital Balance), an independent digital analytics consultancy located in
Perth, Australia for initial cash consideration of A$475,000. The maximum
total consideration is A$5 million payable in cash depending on the
performance of the acquired business up to 31 December 2020.
On 22 September, the Group extended the term of its revolving credit facility
of £30,000,000 with a maturity date of 30 June 2019. The terms of the
extension, including covenants, remain unchanged.
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 2017. 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 2017;
· 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
26 September 2017
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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