REG - Mission Marketing - Audited results for the year to 31 December 2014 <Origin Href="QuoteRef">TMMG.L</Origin> - Part 2
26/03/2015 07:01
- Part 2: For the preceding part double click ID:nRSZ4796Ia
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A final dividend of 0.85 pence is to be paid on 20 July 2015 to those
shareholders on the register at 10 July 2015. In accordance with IFRS the
final dividend of 0.85p will be recognised in the 2015 accounts, should it be
approved by shareholders at the AGM.
10 Earnings Per Share
The calculation of the basic and diluted earnings per share is based on the
following data, determined in accordance with the provisions of IAS 33:
Earnings per Share.
Year to Year to
31 December2014 31 December2013
£'000 £'000
Earnings
Reported profit for the year 4,242 2,353
Attributable to:
Equity holders of the parent 4,197 2,353
Non-controlling interests 45 -
4,242 2,353
Headline earnings (Note 3) 4,301 3,649
Attributable to:
Equity holders of the parent 4,256 3,649
Non-controlling interests 45 -
4,301 3,649
Number of shares
Weighted average number of ordinary shares for the purpose of basic earnings per share 77,333,357 75,668,570
Dilutive effect of securities:
Employee share options 3,711,804 3,886,360
Bank warrants 1,927,758 2,510,283
Weighted average number of ordinary shares for the purpose of diluted earnings per share 82,972,919 82,065,213
Reported basis:
Basic earnings per share (pence) 5.43 3.11
Diluted earnings per share (pence) 5.06 2.87
Headline basis:
Basic earnings per share (pence) 5.50 4.82
Diluted earnings per share (pence) 5.13 4.45
Basic earnings per share includes shares to be issued subject only to time as
if they had been issued at the beginning of the period.
11. Intangible Assets
Goodwill Year to Year to
31 December2014 31 December2013
£'000 £'000
Cost
At 1 January 75,278 74,314
Recognised on acquisition of subsidiaries 4,048 1,058
Adjustment to consideration - (94)
At 31 December 79,326 75,278
Impairment adjustment
At 1 January 4,273 3,995
Impairment during the year - 278
At 31 December 4,273 4,273
Net book value at 31 December 75,053 71,005
Additions in the year relate to the acquisitionsset out in more detail in Note
13.
In accordance with the Group's accounting policies, an annual impairment test
is applied to the carrying value of goodwill. The review performed assesses
whether the carrying value of goodwill is supported by the net present value
of projected cash flows derived from the underlying assets for each
cash-generating unit ("CGU"). For all CGUs, the Directors assessed the
sensitivity of the impairment test results to changes in key assumptions and
concluded that a reasonably possible change to the key assumptions would not
cause the carrying value of goodwill to exceed the net present value of its
projected cash flows.
Other Intangible Assets
Year to Year to
31 December 2014 31 December 2013
£'000 £'000
Cost
At 1 January 2,079 1,209
Additions 1,302 870
At 31 December 3,381 2,079
Amortisation and impairment
At 1 January 559 95
Amortisation charge for the year 436 299
Impairment charge for the year 263 165
At 31 December 1,258 559
Net book value 2,123 1,520
Additions in the year include client relationships and trade names acquired
relating to the Proof, Speed and Splash acquisitions.
12.Bank Overdrafts, Loans and Net Debt
31 December 2014 31 December 2013
£'000 £'000
Bank loan outstanding 11,000 11,572
Unamortised bank debt arrangement fees - (285)
Carrying value of loan outstanding 11,000 11,287
Less: Cash and short term deposits (1,549) (571)
Net bank debt 9,451 10,716
The borrowings are repayable as follows:
Less than one year 11,000 1,714
In one to two years - 9,858
In more than two years but less than three years - -
11,000 11,572
Unamortised bank debt arrangement fees - (285)
11,000 11,287
Less: Amount due for settlement within 12 months (shown under current liabilities) (11,000) (1,714)
Amount due for settlement after 12 months - 9,573
Bank debt arrangement fees, where they can be amortised over the life of the
loan facility, are included in finance costs. The unamortised portion is
reported as a reduction in bank loans outstanding.
At 31 December 2014, the Group had a term loan facility of £4.0m due for
repayment by December 2015 on a quarterly basis, and a revolving credit
facility of up to £7.0m (fully drawn), expiring on 27 December 2015. As a
result, the full £11.0m of outstanding loans at 31 December 2014 is classified
within current liabilities in the Group balance sheet. On 5 February 2015, the
Group signed new bank facilities replacing those in place at 31 December 2014.
The new facilities are a £8m term loan and a revolving credit facility of up
to £7m, both repayable by 5 February 2019. Had these new facilities been in
place at 31 December 2014, £1.5m of the outstanding loans would have been
classified within current liabilities and £9.5m within non current
liabilities.
Interest on the old term loan and revolving credit facilities was based on 3
month LIBOR plus 2.75%, payable in cash on loan rollover dates. Interest rate
margins on the new facilities are lower, at 2.25%.
In addition to its committed facilities, the Group had available an overdraft
facility of up to £3.0m with interest payable by reference to National
Westminster Bank plc Base Rate plus 3.5%. In February, this overdraft facility
was replaced by a new facility with a 2.5% interest rate margin.
13. Acquisitions
13.1 Acquisition Obligations
The terms of an acquisition may provide that the value of the purchase
consideration, which may be payable in cash or shares or other securities at a
future date, depends on uncertain future events such as the future performance
of the acquired company. The Directors estimate that the liability for
contingent consideration payments that may be due is as follows:
31 December 2014 31 December 2013
Cash£'000 Shares £'000 Total£'000 Cash£'000 Shares £'000 Total£'000
Less than one year 1,219 - 1,219 375 - 375
Between one and two years 1,368 40 1,408 913 48 961
In more than two years but less than three years 1,113 - 1,113 869 47 916
In more than three years but less than four years 277 - 277 574 - 574
In more than four years but less than five years 548 - 548 - - -
In more than five years 547 - 547 - - -
5,072 40 5,112 2,731 95 2,826
13.2 Acquisition of Proof Communication Ltd
On 1 August 2014, the Group acquired the whole issued share capital of Proof
Communication Ltd ("Proof"), a specialist science, engineering and technology
PR business, to extend and complement the services already being provided by
April Six in the technology sector. The fair value of the consideration given
for the acquisition was £1,493,000, comprising initial cash and share
consideration and deferred contingent cash consideration. 115,347 ordinary
shares were issued as part of the initial consideration. Costs relating to the
acquisition amounted to £36,000 and were expensed.
Maximum contingent consideration of £1,017,000 is dependent on Proof achieving
a profit target over the period 1 January 2014 to 31 December 2015. The Group
has provided for contingent consideration of £511,000 to date.
The fair value of the net identifiable assets acquired was £583,000 resulting
in goodwill and other intangible assets of £910,000. Goodwill arises on
consolidation and is not tax-deductible. Management carried out a review to
assess whether any other intangible assets were acquired as part of the
transaction. Management concluded that customer relationships were acquired
and attributed a value this by applying commonly accepted valuation
methodologies. The goodwill arising on the acquisition is attributable to the
anticipated profitability of the Company.
Book Value Fair Value adjustments Fair Value
£'000 £'000 £'000
Net assets acquired:
Fixed assets 26 - 26
Trade and other receivables 279 - 279
Cash and cash equivalents 526 - 526
Trade and other payables (227) - (227)
Long term creditors and provisions (21) - (21)
583 - 583
Other intangibles recognised at acquisition - 334 334
583 334 917
Goodwill 576
Total consideration 1,493
Satisfied by:
Cash 923
Shares 59
Deferred contingent consideration 511
1,493
Proof contributed turnover of £514,000, operating income of £457,000 and
headline operating profit of £121,000 to the results of the Group since
acquisition.
13.3 Acquisition of Splash Interactive Pte. Ltd
On 30 September 2014, the Group acquired 70% of the issued share capital of
Splash Interactive Pte. Ltd ("Splash"), a specialist digital agency operating
through five territories in Asia, to enhance the Group's digital competence
and to support the Group's existing Asia-based Clients. The fair value of the
consideration given for the acquisition was £2,643,000, comprising initial
cash consideration and deferred contingent cash consideration. Costs relating
to the acquisition amounted to £172,000 and were expensed. In addition, the
Group has an option to purchase, and the vendors also have an option to sell,
the remaining 30% of the issued share capital from 1 January 2018. This option
has been recognised at its estimated future cost of £1,094,000, bringing the
total consideration to £3,737,000.
Maximum contingent consideration of £6,939,000 is dependent on Splash
achieving various profit targets over the period October 2014 to December
2017. The Group has provided for contingent consideration of £2,200,000 to
date.
The fair value of the net identifiable assets acquired was £932,000, of which
the Group's 70% share amounted to £652,000, resulting in goodwill and other
intangible assets of £3,085,000. The non-controlling interest is measured at
the non-controlling interests' proportionate share of Splash's identifiable
net assets. Goodwill arises on consolidation and is not tax-deductible.
Management carried out a review to assess whether any other intangible assets
were acquired as part of the transaction. Management concluded that both a
brand name and customer relationships were acquired and attributed a value to
each of these by applying commonly accepted valuation methodologies. The
goodwill arising on the acquisition is attributable to the anticipated
profitability of the Company.
Book Value Fair Value adjustments Fair Value
£'000 £'000 £'000
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