REG - Mission Marketing - Audited results for the year to 31 December 2015 <Origin Href="QuoteRef">TMMG.L</Origin> - Part 2
22/03/2016 07:05
- Part 2: For the preceding part double click ID:nRSV8192Sa
Adjustment for prior periods (52) -
Foreign deferred tax on overseas subsidiaries 4 -
Tax charge for the year 1,035 1,179
Factors Affecting the Tax Charge for the Current Year:
The tax assessed for the year is marginally lower (2014: higher) than the
standard rate of corporation tax in the UK. The differences are:
Year to 31 December 2015 Year to 31 December 2014
£'000 £'000
Profit before taxation 5,137 5,421
Profit on ordinary activities before tax at the standard rate of corporation tax of 20.25% (2014: 21.5%) 1,040 1,165
Effect of:
Non-deductible expenses/income not taxable 121 136
Timing differences relating to deductibility of share options (23) (68)
Movement in fair value of contingent consideration, not taxable (125) (151)
Adjustments to prior periods (101) (13)
Higher tax rates on overseas earnings 81 -
Depreciation in excess of capital allowances 32 100
Other differences 10 10
Actual tax charge for the year 1,035 1,179
9. Dividends
Year to 31 December 2015 Year to 31 December 2014
£'000 £'000
Amounts recognised as distributions to equity holders in the year:
Interim dividend of 0.30 pence (2014: 0.25 pence) per share 247 205
Final dividend of 0.85 pence (2014: 0.75 pence) 701 566
948 771
A final dividend of 0.9 pence is to be paid in July 2016. In accordance with
IFRS this final dividend will be recognised in the 2016 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 December2015 31 December2014
£'000 £'000
Earnings
Reported profit for the year 4,102 4,242
Attributable to:
Equity holders of the parent 4,011 4,197
Non-controlling interests 91 45
4,102 4,242
Headline earnings (Note 3) 5,157 4,301
Attributable to:
Equity holders of the parent 5,066 4,256
Non-controlling interests 91 45
5,157 4,301
Number of shares
Weighted average number of ordinary shares for the purpose of basic earnings per share 82,479,427 77,333,357
Dilutive effect of securities:
Employee share options 3,269,681 3,711,804
Bank warrants - 1,927,758
Weighted average number of ordinary shares for the purpose of diluted earnings per share 85,749,108 82,972,919
Reported basis:
Basic earnings per share (pence) 4.86 5.43
Diluted earnings per share (pence) 4.68 5.06
Headline basis:
Basic earnings per share (pence) 6.14 5.50
Diluted earnings per share (pence) 5.91 5.13
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.
A reconciliation of the profit after tax on a reported basis and the headline
basis is given in Note 3.
11. Intangible Assets
Goodwill Year to Year to
31 December2015 31 December2014
£'000 £'000
Cost
At 1 January 79,326 75,278
Recognised on acquisition of subsidiaries 4,315 4,048
Adjustment to consideration (35) -
At 31 December 83,606 79,326
Impairment adjustment
At 1 January 4,273 4,273
Impairment during the year - -
At 31 December 4,273 4,273
Net book value at 31 December 79,333 75,053
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 (in
particular expectations of future growth) 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 2015 31 December 2014
£'000 £'000
Cost
At 1 January 3,381 2,079
Additions 1,220 1,302
At 31 December 4,601 3,381
Amortisation and impairment
At 1 January 1,258 559
Amortisation charge for the year 574 436
Impairment charge for the year - 263
At 31 December 1,832 1,258
Net book value 2,769 2,123
Additions in the year include Client relationships and trade names acquired
relating to the Chapter and The Weather acquisitions.
12.Bank Overdrafts, Loans and Net Debt
31 December 2015 31 December 2014
£'000 £'000
Bank loan outstanding 12,875 11,000
Unamortised bank debt arrangement fees (165) -
Carrying value of loan outstanding 12,710 11,000
Less: Cash and short term deposits (1,784) (1,549)
Net bank debt 10,926 9,451
The borrowings are repayable as follows:
Less than one year 1,500 11,000
In one to two years 2,250 -
In more than two years but less than three years 2,500 -
In more than three but less than four years 6,625
12,875 11,000
Unamortised bank debt arrangement fees (165) -
12,710 11,000
Less: Amount due for settlement within 12 months (shown under current liabilities) (1,500) (11,000)
Amount due for settlement after 12 months 11,210 -
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 2015, the Group had a term loan facility of £6.9m due for
repayment by February 2019 on a quarterly basis, and a revolving credit
facility of up to £7.0m (£6.0m drawn at 31 December 2015), expiring on 3
February 2019.
Interest on both the term loan and revolving credit facilities is based on 3
month LIBOR plus 2.25%, payable in cash on loan rollover dates.
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 2.5%.
At 31 December 2015, there was a cross guarantee structure in place with the
Group's bankers by means of a fixed and floating charge over all of the assets
of the Group companies in favour of Royal Bank of Scotland plc.
All borrowings are in sterling.
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 2015 31 December 2014
Cash£'000 Shares £'000 Total£'000 Cash£'000 Shares £'000 Total£'000
Less than one year 2,902 301 3,203 1,219 - 1,219
Between one and two years 2,009 - 2,009 1,368 40 1,408
In more than two years but less than three years 1,715 - 1,715 1,113 - 1,113
In more than three years but less than four years 710 - 710 277 - 277
In more than four years but less than five years 520 - 520 548 - 548
In more than five years - - - 547 - 547
7,856 301 8,157 5,072 40 5,112
13.2 Acquisition of Chapter Agency Ltd
On 26 November 2015, the Group acquired the whole issued share capital of
Chapter Agency Ltd ("Chapter"), a full service marketing communications
agency. The fair value of the consideration given for the acquisition was
£5,394,000, comprising initial cash consideration and deferred contingent cash
and share consideration.
Maximum contingent consideration of £3,700,000 is dependent on Chapter
achieving a profit target over the period 1 January 2015 to 31 December 2018.
The Group has provided for contingent consideration of £3,630,000 to date.
The fair value of the net identifiable assets acquired was £978,000 resulting
in goodwill and other intangible assets of £4,416,000. 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 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
Net assets acquired:
Fixed assets 51 - 51
Stock and work in progress 6 - 6
Trade and other receivables 1,202 - 1,202
Cash and cash equivalents 1,122 - 1,122
Trade and other payables (1,396) - (1,396)
Deferred tax liability (7) - (7)
978 - 978
Other intangibles recognised at acquisition - 1,220 1,220
Deferred tax liability adjustment - (244) (244)
978 1,220 1,954
Goodwill 3,440
Total consideration 5,394
Satisfied by:
Cash 1,550
Deferred initial consideration 214
Deferred contingent consideration 3,630
5,394
Chapter contributed turnover of £385,000, operating income of £256,000 and
headline operating profit of £112,000 to the results of the Group since
acquisition.
13.3 Acquisition of The Weather Digital and Print Communications Ltd
On 13 February 2015, the Group acquired the whole issued share capital of The
Weather Digital and Print Communications Ltd ("The Weather"), one of
Scotland's leading full service digital agencies. The fair value of the
consideration given for the acquisition was £688,000, comprising initial cash
and share consideration and deferred contingent cash and share consideration.
210,136 ordinary shares were issued as part of the initial consideration.
Maximum contingent consideration of £540,000 is dependent on The Weather
achieving various profit targets over the period November 2014 to December
2015. The Group has provided for contingent consideration of £315,000.
The fair value of the net identifiable assets acquired was £141,000 resulting
in goodwill and other intangible assets of £547,000. 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 and concluded that the value of the business lies in its workforce
and as such no other intangible assets were acquired. 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 10 - 10
Trade and other receivables 145 - 145
Cash and cash equivalents 253 - 253
Trade and other payables (267) - (267)
141 - 141
Goodwill 547
Total consideration 688
Satisfied by:
Cash 255
Shares 85
Deferred initial consideration 33
Deferred contingent consideration 315
688
Weather contributed turnover of £782,000, operating income of £722,000 and a
headline operating profit of £222,000 to the results of the Group in 2015.
13.4 Other acquisitions
A total of £272,000 was invested in other acquisitions during the year,
comprising initial cash consideration of £99,000 and deferred contingent
consideration of £173,000.
13.5 Pro-forma results including acquisitions
The Directors estimate that the turnover, operating income and headline
operating profit of the Group would have been approximately £136.5m, £63.8m
and £7.7m had the Group consolidated the results of Chapter, The Weather and
the other smaller acquisitions made during the year, from the beginning of the
year.
14. Share Capital
31 December 2015 31 December 2014
£'000 £'000
Allotted and called up:
83,608,331Ordinary shares of 10p each (2014: 83,398,195 ordinary shares of 10 p each) 8,361 8,340
Options
The Group has the following options in issue:
At start of year Granted Waived/lapsed Exercised At end of year
TMMG Long Term Incentive Plan 3,466,400 1,015,000 (1,200,627) (297,273) 2,983,500
The TMMG Long Term Incentive Plan ("LTIP") was created to incentivise senior
employees across the Group. Nil cost options are awarded at the discretion of
the Remuneration Committee of the Board and vest three years later only if the
profit performance of the Group in the intervening period is sufficient to
meet predetermined criteria (always subject to Remuneration Committee
discretion). During the year, 297,273 of these options were exercised at a
weighted average share price of 41.8p and at the end of the year none of the
outstanding options are exercisable.
Shares held in an Employee Benefit Trust will be used to satisfy share options
exercised under The Mission Marketing Group Long Term Incentive Plan.
This information is provided by RNS
The company news service from the London Stock ExchangeRecent news on Mission
See all newsREG - Mission Group PLC Octopus Investments - Holding(s) in Company
AnnouncementREG - AIM - AIM Notice - 23/04/2024
AnnouncementREG - Mission Group PLC - Issue of Contingent Consideration Shares & TVR
AnnouncementREG - Mission Group PLC - Final Results
AnnouncementREG - Mission Group PLC - Final Results
Announcement