REG - Mission Marketing - Interim Results <Origin Href="QuoteRef">TMMG.L</Origin> - Part 1
RNS Number : 0199AThe Mission Marketing Group PLC24 September 2015The Mission Marketing Group plc
Interim results for the six months to 30 June 2015
The Mission Marketing Group plc ("TMMG" or "the missiontm"), the marketing communications and advertising group, sets out its interim results for the six months ended 30 June 2015.
Trading
Continued growth, both organic and from acquisitions
Some great new Client wins in the period, including Ask, Autoline, BMW, Brewin Dolphin, British Airways, Diageo, Muller Wiseman, RAC, Sage, SAS and Siemens
Full year again expected to have a strong second-half bias - trading remains in line
Continue to seek suitable acquisitions
Income Statement
Operating income (Revenue) up 12% to 29.5m (2014: 26.3m)
Headline operating profit up 15% to 2.4m (2014: 2.1m)
Headline profit before tax up 20% to 2.2m (2014: 1.8m)
Headline Diluted EPS up 12% to 1.88 pence (2014: 1.68 pence)
Balance sheet and cash flow
Net bank debt reduced by 1.5m in the six months to 7.9m
Bank debt leverage ratio maintained below x1.25
Total debt leverage ratio below x1.5
Dividend
Significant increase in interim dividend to 0.3p (2014: 0.25p)
Payable on 4 December 2015 to shareholders on the register at 6 November 2015
An interview with David Morgan, Chairman, can be viewed from 9.30am today at:
http://www.themission.co.uk/investor-centre/reports
Enquiries:
The Mission Marketing Group plc
020 7462 1415
David Morgan, Chairman
Peter Fitzwilliam, Finance Director
finnCap Limited
020 7220 0500
Geoff Nash/James Thompson (Corporate Finance)
Stephen Norcross (Corporate Broking)
the missiontmis a network of entrepreneurial marketing communications Agencies employing over 850 people in the UK, Asia and San Francisco. The Group comprises a complementary mix of integrated generalists, specialists in specific marketing/ communications activities and specialists in particular market sectors, all providing award-winning solutions to national and international Clients.
Chairman's Statement
Profits up, debt down and expectations high.
I'm delighted to report that, in the ever changing and challenging sector that we live in, our Agencies have continued to push forward in the first half of this year with growth from new initiatives as well as improvements within our core offerings.
We have seen growth in both our reach and our expertise particularly within digital and data development areas whilst at the same time created new initiatives such as Ethology which sees a harnessing of data with insights and direction in a rather clever way that delivers great responses from consumers. Digital has always been at the heart of what our Agencies do but the pace at which they are exploring and creating new and meaningful techniques is quite astonishing.
But that's not all. Nearly all of our Agencies continue to punch above their weight with new business wins across the board from Ask, Autoline, BMW, Brewin Dolphin, British Airways, Diageo, Muller Wiseman, RAC, Sage, SAS, Siemens and many, many more. We continue to upgrade our talent, expertise and facilities, one example being the recent opening of our new facility for our hugely talented Agency, Story in Edinburgh.
In December last year we launched Speed PR which has gone very well and this year we have bedded in Splash in Asia, acquired late last year, as well as other smaller but perfectly formed Agencies that we absorbed into Story, Bray Leino and April Six. The April Six opening in San Francisco continues to thrive as does our recent merger to create the bigdog Agency with offices now in Leicester, Birmingham, Norwich and London.
Alongside this activity we recently launched Mongoose Sports Marketing by hiring a very talented team from within the Sports Marketing world. Early days, but suffice to say that we are very excited by this initiative. Mongoose is our latest example of how we are striving to build the Group in a way that is seamless and provides our Clients with a breadth of capabilities so that their budgets go further and are utilised wider. Some recent wins at Mongoose are already suggesting that their refreshing approach to Sports Marketing has clear resonance with Corporates, Brands and Events.
Following the announcement that Stephen Boyd will be stepping down from the Board at the end of the year, we are delighted to announce the appointment of Julian Hanson-Smith as a Non-Executive Director with effect from 1 October 2015. Julian was instrumental in setting up the hugely successful financial PR firm Financial Dynamics before pursuing a career in Private Equity so he is highly experienced in our sector.
It may be a clich but I am a firm believer that to fail to plan is to plan to fail. That is why we have been focusing on our long term strategy and I am confident that we know where we are going and as such we have plotted our future course. We are beginning to see the fruits of this quite meticulous planning and I do feel that our course is now well set to take us into 2016 and beyond.
And no, whilst it's going well for us just now we won't become ultracrepidarian nor are we ready for saturnalia but we do see the Group continue to expand and deliver against our own expectations. We will continue to acquire with consanguinity and expect to make a couple of rather exciting announcements later this year.
Our mission remains simple: to be seen to be the most respected and regarded Agency Group that delivers success and value to its Clients wherever they require us to. At the same time we will continue to manage our business in a risk-averse way as we have done since we restructured five years ago. Our debt continues to reduce and our profitability continues to increase and that's just how we like it.
Trading results
Turnover ("billings") for the six months ended 30 June 2015 increased by 6% to 66.6m (2014: 62.8m). Billings include pass-through costs (eg TV companies' charges for buying air-time) and thus the Board does not consider turnover to be a key performance measure. Instead, the Board views operating income (turnover less third party costs) as a more meaningful measure of Agency activity levels.
We are pleased to report a strong increase (of 12%) in operating income ("revenue") to 29.5m (2014: 26.3m), aided by the acquisitions made in the second half of 2014.
The Directors measure the Group's profit performance by reference to headline profits, calculated before exceptional items and acquisition adjustments (as set out in Note 3). Accordingly, we are really pleased to report a 15% increase in headline operating profits, to 2.4m (2014: 2.1m).
Profit margins in the first half (headline operating profit as a percentage of revenue) remained at 8% as improved margins in the Group's PR, Media and Events and Learning activities, partly driven by the restructuring undertaken at the start of the year, offset the higher initial running costs of our overseas businesses and the start-up costs of our new Sports Marketing business. Generally speaking, our Clients' spending cycles tend to result in a second half bias in our financial results, including higher profit margins, and we expect this pattern to be repeated in 2015.
Adjustments to reported profits in 2015 comprise the previously reported restructuring costs of 0.6m, treated as exceptional items (2014: nil), offset by acquisition-related items of 0.2m (the net of adjustments in estimated contingent acquisition consideration and the amortisation of intangibles) (2014: 0.4m). After these adjustments, reported operating profits were 2.0m (2014: 2.5m).
After financing costs of 0.2m (2014: 0.3m), headline profit before tax increased by 20%, to 2.2m (2014: 1.8m), and reported profit before tax was 1.7m (2014: 2.2m).
The Group estimates an effective tax rate of 22% (2014: 24%), resulting in profits after tax of 1.4m for the six months (2014: 1.7m), and an increase of 12% in fully diluted headline EPS to 1.88 pence (2014: 1.68 pence).
Balance sheet, cash flow and dividend
Operating cash flows are traditionally stronger in the first half of the year than the second but the start of 2015 didn't see quite the same sizeable working capital inflow as in prior years. Even so, inflows from operating activities were 2.3m (2014: 5.2m), leading to a 1.5m reduction in net debt to 7.9m at 30 June (30 June 2014: 7.3m). Our "leverage ratio" (ratio of net bank debt to adjusted EBITDA) stayed well below x1.25 and our new performance measure, "total leverage" (ratio of total debt, including both bank debt and deferred contingent acquisition consideration), fell to below x1.5.
Further to the announcement of 16 April, the Employee Benefit Trust continues to make periodic share purchases when appropriate and currently holds 1,119,663 ordinary shares.
At 30 June 2015, the Group had 14.6m of committed facilities, of which 4m was undrawn, and an additional overdraft facility of 3m. As in prior years, due to the phasing of working capital requirements, an increase in net debt is predicted in the second half of the year.
Having held the interim dividend unchanged for two years, at 0.25p, the Directors have declared an increased interim dividend of 0.3p in 2015, payable on 4 December 2015 to shareholders on the register at 6 November 2015. Accordingly the ex-dividend date is 5 November 2015.
Current trading and outlook
We had a very solid start to the year and continue to drive organic growth across our Agencies whilst adding to our offering with suitable acquisitions. We expect more of the same in the second half and the Board remains confident of meeting expectations for the year.
David Morgan
Chairman
Condensed Consolidated Income Statement
for the 6 months ended 30 June 2015
6 months to
6 months to
Year ended
30 June 2015
30 June 2014
31 December 2014
Unaudited
Unaudited
Audited
Note
'000
'000
'000
TURNOVER
2
66,643
62,826
125,547
Cost of sales
(37,123)
(36,536)
(70,575)
OPERATING INCOME
2
29,520
26,290
54,972
Headline operating expenses
(27,099)
(24,191)
(48,895)
HEADLINE OPERATING PROFIT
2
2,421
2,099
6,077
Exceptional items
4
(634)
-
-
Acquisition adjustments
5
192
417
14
OPERATING PROFIT
1,979
2,516
6,091
Net finance costs
6
(242)
(289)
(670)
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
1,737
2,227
5,421
Taxation
7
(382)
(534)
(1,179)
PROFIT FOR THE PERIOD
1,355
1,693
4,242
Attributable to:
Equity holders of the parent
1,323
1,693
4,197
Non-controlling interests
32
-
45
1,355
1,693
4,242
Basic earnings per share (pence)
8
1.60
2.24
5.43
Diluted earnings per share (pence)
8
1.54
2.06
5.06
Headline basic earnings per share (pence)
8
1.96
1.82
5.50
Headline diluted earnings per share (pence)
8
1.88
1.68
5.13
Condensed Consolidated Statement of Comprehensive Income
for the 6 months ended 30 June 2015
PROFIT FOR THE PERIOD
1,355
1,693
4,242
Other comprehensive income - items that may be reclassified separately to profit or loss:
Exchange differences on translation of foreign operations
4
-
42
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
1,359
1,693
4,284
Attributable to:
Equity holders of the parent
1,326
1,693
4,227
Non-controlling interests
33
-
57
1,359
1,693
4,284
Condensed Consolidated Balance Sheet
as at 30 June 2015
As at
As at
As at
30 June 2015
30 June 2014
31 December 2014
Unaudited
Unaudited
Audited
Note
'000
'000
'000
FIXED ASSETS
Intangible assets
9
77,423
72,097
77,176
Property, plant and equipment
4,528
4,147
4,366
Interests in joint ventures
4
-
-
Deferred tax assets
68
-
60
82,023
76,244
81,602
CURRENT ASSETS
Stock and work in progress
355
487
361
Trade and other receivables
30,844
26,855
25,859
Cash and short term deposits
10
2,524
2,072
1,549
33,723
29,414
27,769
CURRENT LIABILITIES
Trade and other payables
(16,272)
(15,054)
(12,985)
Accruals
(11,160)
(12,157)
(8,958)
Corporation tax payable
(1,187)
(904)
(895)
Bank loans
10
(1,500)
(2,286)
(11,000)
Acquisition obligations
11
(2,095)
(482)
(1,219)
(32,214)
(30,883)
(35,057)
NET CURRENT ASSETS / (LIABILITIES)
1,509
(1,469)
(7,288)
TOTAL ASSETS LESS CURRENT LIABILITIES
83,532
74,775
74,314
NON CURRENT LIABILITIES
Bank loans
10
(8,931)
(7,084)
-
Obligations under finance leases
(340)
-
(11)
Acquisition obligations
11
(2,400)
(1,098)
(3,893)
Deferred tax liabilities
(27)
-
(26)
NET ASSETS
71,834
66,593
70,384
CAPITAL AND RESERVES
Called up share capital
8,361
7,699
8,340
Share premium account
42,268
40,288
42,203
Own shares
(359)
(355)
(260)
Share option reserve
370
717
264
Foreign currency translation reserve
33
-
30
Retained earnings
20,791
18,244
19,470
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
71,464
66,593
70,047
Non controlling interests
370
-
337
TOTAL EQUITY
71,834
66,593
70,384
Condensed Consolidated Cash Flow Statement
for the 6 months ended 30 June 2015
6 months to 6 months to Year ended 30 June 2015 30 June 2014 31 December 2014 Unaudited Unaudited Audited 000 000 000 Operating profit 1,979 2,516 6,091 Depreciation and amortisation charges 985 762 1,815 Movements in the fair value of contingent consideration (490) (603) (701) Loss / (profit) on disposal of property, plant and equipment 2 (3) 2 Non cash charge for share options and shares awarded 106 103 45 Increase in receivables (4,839) (6,104) (2,916) Decrease / (increase) in stock and work in progress 6 (122) 16 Increase in payables 5,251 9,154 1,825 OPERATING CASH FLOW 3,000 5,703 6,177 Net finance costs (498) (216) (314) Tax paid (155) (256) (892) Net cash inflow from operating activities 2,347 5,231 4,971 INVESTING ACTIVITIES Proceeds on disposal of property, plant and equipment 6 3 44 Purchase of property, plant and equipment (449) (1,265) (2,186) Acquisition of subsidiaries and joint ventures (258) - (2,062) Payment of obligations relating to acquisitions made in prior periods (448) (381) (815) Cash acquired with subsidiaries 253 - 1,001 Net cash outflow from investing activities (896) (1,643) (4,018) FINANCING ACTIVITIES Dividends paid - - (771) Movement in HP creditor and finance leases (4) (35) (73) Repayment of long term banks loans (375) (2,000) (571) Proceeds on issue of ordinary share capital - - 2,257 Cash settlement of equity warrants - - (675) Purchase of own shares held in EBT (101) (52) (184) Net cash outflow from financing activities (480) (2,087) (17) Increase in cash and cash equivalents 971 1,501 936 Exchange differences on translation of foreign subsidiaries 4 - 42 Cash and cash equivalents at beginning of period 1,549 571 571 CASH AND CASH EQUIVALENTS AT END OF PERIOD 2,524 2,072 1,549Condensed Consolidated Statement of Changes in Equity
for the 6 months ended 30 June 2015
Share
capital
'000
Share premium
'000
Own shares
'000
Share option reserve
'000
Foreign currency translation reserve
'000
Retained earnings
'000
Total attributable to equity holders of parent
'000
Non-controlling interest
'000
Total equity
'000
At 1 January 2014
7,699
40,288
(462)
614
-
16,710
64,849
-
64,849
Total comprehensive income for the period
-
-
-
-
-
1,693
1,693
-
1,693
Credit for share option scheme
-
-
-
103
-
-
103
-
103
Own shares purchased by EBT
-
-
(52)
-
-
-
(52)
-
(52)
Shares awarded from own shares
-
-
159
-
-
(159)
-
-
-
At 30 June 2014
7,699
40,288
(355)
717
-
18,244
66,593
-
66,593
Profit for the period
-
-
-
-
-
2,504
2,504
45
2,549
Exchange differences on translation of foreign operations
-
-
-
-
30
-
30
12
42
Total comprehensive income for the period
-
-
-
-
30
2,504
2,534
57
2,591
Non-controlling interest of new acquisitions
-
-
-
-
-
-
-
280
280
Newsharesissued
641
1,915
-
-
-
-
2,556
-
2,556
Debit for share option scheme
-
-
-
(58)
-
-
(58)
-
(58)
Own shares purchased by EBT
-
-
(132)
-
-
-
(132)
-
(132)
Shares awarded from own shares
-
-
227
-
-
(227)
-
-
-
Settlement of warrants
-
-
-
-
-
(675)
(675)
-
(675)
Transfer from share option reserve to retained earnings
-
-
-
(395)
-
395
-
-
-
Dividend paid
-
-
-
-
-
(771)
(771)
-
(771)
At 31 December 2014
8,340
42,203
(260)
264
30
19,470
70,047
337
70,384
Profit for the period
-
-
-
-
-
1,323
1,323
32
1,355
Exchange differences on translation of foreign operations
-
-
-
-
3
-
3
1
4
Total comprehensive income for the period
-
-
-
-
3
1,323
1,326
33
1,359
New shares issued
21
65
-
-
-
-
86
-
86
Credit for share option scheme
-
-
-
106
-
-
106
-
106
Own shares purchased by EBT
-
-
(101)
-
-
-
(101)
-
(101)
Shares awarded from own shares
-
-
2
-
-
(2)
-
-
-
At 30 June 2015
8,361
42,268
(359)
370
33
20,791
71,464
370
71,834
Notes to the unaudited Interim Report
for the 6 months ended 30 June 2015
1. Accounting Policies
Basis of preparation
The condensed consolidated interim financial statements for the six months ended 30 June 2015 have been prepared in accordance with the IAS 34 "Interim Financial Reporting" and the Group's accounting policies.
The Group's accounting policies are in accordance with International Financial Reporting Standards as adopted by the European Union and are set out in the Group's Annual Report and Accounts 2014 on pages 40-42. These are consistent with the accounting policies which the Group expects to adopt in its 2015 Annual Report. The Group has not early-adopted any Standard, Interpretation or Amendment that has been issued but is not yet effective.
The information relating to the six months ended 30 June 2015 and 30 June 2014 is unaudited and does not constitute statutory financial statements as defined in Section 434 of the Companies Act 2006. The comparative figures for the year ended 31 December 2014 have been extracted from the Group's Annual Report and Accounts 2014, on which the auditors gave an unqualified opinion and did not include a statement under section 498 (2) or (3) of the Companies Act 2006. The Group Annual Report and Accounts for the year ended 31 December 2014 have been filed with the Registrar of Companies.
Going concern
The Directors have considered the financial projections of the Group, including cash flow forecasts, the availability of committed bank facilities and the headroom against covenant tests for the coming 12 months. They are satisfied that the Group has adequate resources for the foreseeable future and that it is appropriate to continue to adopt the going concern basis in preparing these interim financial statements.
Accounting estimates and judgements
The Group makes estimates and judgements concerning the future and the resulting estimates may, by definition, vary from the actual results. The Directors considered the critical accounting estimates and judgements used in the financial statements and concluded that the main areas of judgement are:
Potential impairment of goodwill and other intangible assets;
Contingent deferred payments in respect of acquisitions;
Revenue recognition policies in respect of contracts which straddle the period end; and
Valuation of intangible assets on acquisitions.
These estimates are based on historical experience and various other assumptions that management and the Board of Directors believe are reasonable under the circumstances.
2. Segmental Information
Business segmentation
For management purposes the Group had twelve operating units during the period, each of which carries out a range of activities. These activities have been divided into four business and operating segments as defined by IFRS 8 which form the basis of the Group's primary reporting segments, namely: Branding, Advertising and Digital; Media; Public Relations; and Events and Learning.
6 months to
6 months to
Year ended
30 June
2015
30 June
2014
31 December
2014
Unaudited
Unaudited
Audited
'000
'000
'000
Turnover
Business segment
Branding, Advertising & Digital
36,032
33,861
68,786
Media
23,570
22,893
44,393
Public Relations
3,830
1,902
5,130
Events and Learning
3,211
4,170
7,238
66,643
62,826
125,547
Operating income
Business segment
Branding, Advertising & Digital
23,179
21,425
44,036
Media
1,996
1,839
4,036
Public Relations
3,179
1,564
4,131
Events and Learning
1,166
1,462
2,769
29,520
26,290
54,972
Headline Operating Profit
Business segment
Branding, Advertising & Digital
2,470
2,477
6,014
Media
442
342
949
Public Relations
460
100
632
Events and Learning
35
25
89
3,407
2,944
7,684
Central costs
(986)
(845)
(1,607)
2,421
2,099
6,077
Geographical segmentation
With the acquisition of Splash Interactive Pte. Ltd, trading in five territories in Asia, and the growth in April Six's San Francisco operations, the Group's activities outside the UK are broadening, but substantially all the Group's business remains based and executed in the UK, with less than 10% attributed to territories outside of the UK.
3. Reconciliation of Reported Profit to Headline Profit
6 months to
30 June
2015
Unaudited
'000
6 months to
30 June
2014
Unaudited
'000
Year ended
31 December
2014
Audited
'000
PBT
PAT
PBT
PAT
PBT
PAT
'000
'000
'000
'000
'000
'000
Headline profit
2,179
1,650
1,810
1,376
5,533
4,301
Exceptional items (Note 4)
(634)
(495)
-
-
(126)
(98)
Acquisition-related items (Note 5)
192
200
417
317
14
39
Reported profit
1,737
1,355
2,227
1,693
5,421
4,242
In order to provide a clearer understanding of underlying profitability, headline profits exclude exceptional items and acquisition-related costs and adjustments.
4. Exceptional Items
6 months to
30 June
2015
6 months to
30 June
2014
Year ended
31 December
2014
Unaudited
Unaudited
Audited
'000
'000
'000
Restructuring costs
634
-
-
Exceptional items affecting reported operating profit
634
-
-
Accelerated amortisation of debt arrangement fees
-
-
126
Exceptional items affecting reported profit before tax
634
-
126
Exceptional items consist of revenue or costs that, either by their size or nature, require separate disclosure in order to give a fuller understanding of the Group's financial performance.
Exceptional costs in 2015 comprise amounts payable for loss of office and other costs incurred relating to the restructuring of certain operations in order to streamline activities and underpin the Board's growth expectations. In 2014 the exceptional item related to the accelerated write off of arrangement fees attached to banking facilities which were replaced by the signing of new banking facilities.
5. Acquisition Adjustments
6 months to
30 June
2015
Unaudited
6 months to
30 June
2014
Unaudited
Year ended
31 December 2014
Audited
'000
'000
'000
Movement in fair value of contingent
consideration
490
603
701
Amortisation of Other Intangible Assets
recognised on acquisitions
(273)
(165)
(436)
Acquisition transaction costs expensed
(25)
(21)
(251)
192
417
14
The movement in fair value of contingent consideration relates to a net downward revision in the estimate payable to vendors of businesses acquired in prior years. Acquisition transaction costs relate to the acquisitions made during the year.
6. Net Finance Costs
6 months to
6 months to
Year ended
30 June
2015
30 June
2014
31 December 2014
Unaudited
Unaudited
Audited
'000
'000
'000
Net interest on bank loans, overdrafts and deposits
(206)
(206)
(385)
Amortisation of bank debt arrangement fees
(36)
(83)
(159)
Headline net finance costs
(242)
(289)
(544)
Accelerated amortisation of bank debt arrangement fees (Note 4)
-
-
(126)
Net finance costs
(242)
(289)
(670)
7. Taxation
The taxation charge for the period ended 30 June 2015 has been based on an estimated effective tax rate on profit on ordinary activities of 22% (30 June 2014: 24%).
8. 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 IAS33: "Earnings per Share".
6 months to
6 months to
Year ended
30 June
2015
30 June
2014
31 December 2014
Unaudited
Unaudited
Audited
'000
'000
'000
Earnings
Reported profit for the year
1,355
1,693
4,242
Attributable to:
Equity holders of the parent
1,323
1,693
4,197
Non-controlling interests
32
-
45
1,355
1,693
4,242
Headline earnings (Note 3)
1,650
1,376
4,301
Attributable to:
Equity holders of the parent
1,618
1,376
4,256
Non-controlling interests
32
-
45
1,650
1,376
4,301
Number of shares
Weighted average number of ordinary shares for the purpose of basic earnings per share
82,513,656
75,746,251
77,333,357
Dilutive effect of securities:
Employee share options
3,418,682
3,885,718
3,711,804
Bank warrants
-
2,513,185
1,927,758
Weighted average number of ordinary shares for the purpose of diluted earnings per share
85,932,338
82,145,154
82,972,919
Reported basis:
Basic earnings per share (pence)
1.60
2.24
5.43
Diluted earnings per share (pence)
1.54
2.06
5.06
Headline basis:
Basic earnings per share (pence)
1.96
1.82
5.50
Diluted earnings per share (pence)
1.88
1.68
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.
9. Intangible Assets
30 June
2015
30 June
2014
31 December 2014
Unaudited
Unaudited
Audited
'000
'000
'000
Goodwill
75,573
71,005
75,053
Other intangible assets
1,850
1,092
2,123
77,423
72,097
77,176
Goodwill
30 June
2015
30 June
2014
31 December 2014
Unaudited
Unaudited
Audited
'000
'000
'000
Cost
At 1 January
79,326
75,278
75,278
Recognised on acquisition of subsidiaries
555
-
4,048
Adjustment to consideration
(35)
-
-
At 30 June / 31 December
79,846
75,278
79,326
Impairment adjustment
At 1 January
4,273
4,273
4,273
Impairment during period
-
-
-
At 30 June / 31 December
4,273
4,273
4,273
Net book value
75,573
71,005
75,053
Goodwill arose from the acquisition of the following subsidiary companies and is comprised of the following substantial components:
30 June
2015
30 June
2014
31 December 2014
Unaudited
Unaudited
Audited
'000
'000
'000
April Six Ltd
9,411
9,411
9,411
Big Communications Ltd*
-
8,125
8,125
Big Dog Agency Ltd*
9,639
-
-
Bray Leino Ltd
27,761
30,846
27,761
Fox Murphy Ltd (trading as balloon dog)*
-
1,514
1,514
Proof Communications Ltd
576
-
576
Speed Communications Agency Ltd
3,686
-
3,686
RLA Group Ltd
6,572
6,572
6,572
Solaris Healthcare Network Ltd
1,058
1,058
1,058
Splash Interactive Pte. Ltd
2,356
-
2,391
Story UK Ltd
6,969
6,969
6,969
The Weather Digital and Print Communications Ltd
555
-
-
ThinkBDW Ltd
6,283
6,283
6,283
Other smaller acquisitions
707
227
707
75,573
71,005
75,053
*In 2015, Fox Murphy Ltd was renamed Big Dog Agency Ltd and the business of Big Communications Ltd was transferred across into this entity. The goodwill of both Fox Murphy Ltd and Big Communications Ltd has therefore been combined in Big Dog Agency Ltd.
In accordance with the Group's accounting policies, an annual impairment test is applied to the carrying value of goodwill, unless there is an indication that one of the cash generating units has become impaired during the year, in which case an impairment test is applied to the relevant asset. The next impairment test will be undertaken at 31 December 2015.
Other Intangible Assets
6 months to 6 months to Year ended 30 June2015 30 June2014 31 December 2014 Unaudited Unaudited Audited 000 000 000 Cost At 1 January 3,381 2,079 2,079 Additions - - 1,302 Adjustment to consideration - (263) - At 30 June / 31 December 3,381 1,816 3,381 Amortisation and impairment At 1 January 1,258 559 559 Amortisation charge for the period 273 165 436 Impairment charge for the period - - 263 At 30 June / 31 December 1,531 724 1,258 Net book value 1,850 1,092 2,123
Other intangible assets consist of intellectual property rights, Client relationships and trade names.
10. Bank Loans and Net Debt
30 June
2015
30 June
2014
31 December 2014
Unaudited
Unaudited
Audited
'000
'000
'000
Bank loan outstanding
10,625
9,571
11,000
Adjustment to amortised cost
(194)
(201)
-
Carrying value of loan outstanding
10,431
9,370
11,000
Less: Cash and short term deposits
(2,524)
(2,072)
(1,549)
Net bank debt
7,907
7,298
9,451
The borrowings are repayable as follows:
Less than one year
1,500
2,286
11,000
In one to two years
1,750
7,285
-
In more than two years but less than three years
2,500
-
-
In more than three years but less than four years
4,875
-
-
10,625
9,571
11,000
Adjustment to amortised cost
(194)
(201)
-
10,431
9,370
11,000
Less: Amount due for settlement within 12 months
(shown under current liabilities)
(1,500)
(2,286)
(11,000)
Amount due for settlement after 12 months
8,931
7,084
-
11. 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 payments that may be due is as follows:
Cash
'000
Shares
'000
Total
'000
30 June 2014
Less than one year
482
-
482
Between one and two years
621
40
661
In more than two years but less than three years
437
-
437
1,540
40
1,580
31 December 2014
Less than one year
1,219
-
1,219
Between one and two years
1,368
40
1,408
In more than two years but less than three years
1,113
-
1,113
In more than three years but less than four years
277
-
277
In more than four years but less than five years
548
-
548
In more than five years
547
-
547
5,072
40
5,112
30 June 2015
Less than one year
1,995
100
2,095
Between one and two years
926
-
926
In more than two years but less than three years
379
-
379
In more than three years but less than four years
548
-
548
In more than four years but less than five years
547
-
547
4,395
100
4,495
12. Contribution of Newly Acquired/Commenced Ventures to the Results of the Group
Proof Communications Ltd, Splash Interactive Pte. Ltd, Speed Communications Agency Ltd and Brandon Hill Communications Ltd were all acquired in the second half of 2014. In addition, The Weather Print and Digital Communications Ltd was acquired on 13 February 2015 and also in the first half of 2015 the Group commenced pre-launch activities in connection with its new Sports Marketing venture. These entities contributed turnover of 4.0m, operating income of 3.3m and headline operating profit of 0.3m to the results of the Group for the six month period ended 30 June 2015, although it is almost impossible to establish exactly how much of this contribution arose from the entities in their own standalone right and how much arose from new business activity and referrals generated from other Group Agencies as part of our efforts to optimise collaboration and concinnity.
13. Post Balance Sheet Events
There were no material post balance sheet events.
This information is provided by RNSThe company news service from the London Stock ExchangeENDIR PKNDDABKDDCB
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