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TMMG The Mission Marketing Group Plc

78.50
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
The Mission Marketing Group Plc LSE:TMMG London Ordinary Share GB00B11FD453 ORD 10P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 78.50 77.00 80.00 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

The Mission Marketing Group PLC Half-year Report (3558R)

21/09/2017 7:00am

UK Regulatory


The Mission Marketing (LSE:TMMG)
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TIDMTMMG

RNS Number : 3558R

The Mission Marketing Group PLC

21 September 2017

The Mission Marketing Group plc

Interim results for the six months to 30 June 2017

The Mission Marketing Group plc ("TMMG" or "the mission(tm) "), the marketing communications and advertising group, sets out its unaudited interim results for the six months ended 30 June 2017.

Highlights

   --      Good organic growth from the Group's core business 

-- Some great new business wins in the period, including Mars, Neff, Reckitt Benckiser, Revlon, The Royal Mint and Universal Studios

   --      Recently acquired RJW trading well 
   --      fuse now officially launched 
   --      Mongoose Sports and April Six Asia start-up ventures moved into profitability 

Financial

   --      Revenue up 4% to GBP33.8m (2016: GBP32.4m) 
   --      Like-for-like revenue up 6% in Branding, Advertising and Digital 
   --      Headline profit before tax up 11% to GBP2.9m (2016: GBP2.6m) 
   --      Headline diluted EPS up 11% to 2.58 pence (2016: 2.33 pence) 
   --      A strong second-half bias again predicted 
   --      Cash inflows from operating activities of GBP5.8m (2016: GBP4.8m) 

-- Net bank debt reduced by GBP2.1m in the six months after settling prior and new acquisition obligations

Dividend

   --      Interim dividend increased by 10% to 0.55p (2016: 0.5p) 
   --      Payable on 1 December 2017 to shareholders on the register at 3 November 2017 

David Morgan, Chairman, commented: "With our business becoming stronger, including good growth from our core business, we have a great platform from which to grow. We will continue to target further margin improvements, seek new opportunities, drive into new markets and upskill our offering. We again expect a strong second half to the year and are confident that we will deliver another year of growth."

An interview with David Morgan, Chairman, can be viewed from 9.30am today at:

http://www.themission.co.uk/investor-centre/reports

Enquiries:

 
 
  David Morgan, Executive Chairman 
   Peter Fitzwilliam, Finance Director       020 7462 
   The Mission Marketing Group plc           1415 
 
    Mark Percy / Patrick Castle / James 
    Wolfe (Corporate Finance) 
    John Ritchie (Institutional Sales) 
                                           020 7408 
  Shore Capital (Nomad and Broker)          4090 
 

the mission(tm) is a network of entrepreneurial marketing communications Agencies employing 1,000 people in the UK, Asia and US. The Group comprises three divisions: Integrated Generalists, Sector Specialists and Activity Specialists, which work together to provide Clients with the expertise and resource to make them more successful in today's dynamic environment.

www.themission.co.uk

Chairman's Statement

FOCUSSED ON THE FUTURE

In our first six months of trading this year we have continued to grow our business and, as well as consolidating our position, we have kept a keen eye on our future as we implement the plans that match our development strategy. Our confidence in our Agencies, the direction we are heading in and our unique, entrepreneurial structure continues to grow momentum and is, we believe, creating a business model that is very much focussed on the future.

Of the many highlights so far this year the most important strategic development was our acquisition of RJW in April. RJW is a highly-regarded consultancy specialising in pricing and market access in the pharmaceutical sector that works closely with some of the world's leading companies from the very early stages of product development. Working alongside our Solaris Healthcare Agency, which operates further downstream, it allows us to deliver end-to-end marketing and research services to healthcare Clients. It is a delight to have the RJW team join the mission(tm) and be part of our drive towards creating a new and dynamic force in Healthcare marketing.

The first half of the year also saw some of our start-up investments move into profitability, notably Mongoose Sports and April Six Asia. This, together with continued progress from our core Agencies, has helped us to retain a calm and steady approach against a backdrop of UK uncertainty and nervousness.

With upwards of 250 people across our Group being directly involved in technological developments that enhance our Clients' marketing capabilities, we reported at the end of last year that we had identified a number of innovative IP-owned products and systems that we were bringing together under a dedicated team, branded fuse. This initiative embraces the technological creativity already inherent in our Agencies and takes it to a wider audience. We formally launched fuse in July and are excited by its potential.

We have also taken a long look at our overall Group strategy, culminating in a host of new initiatives to bring greater clarity and external understanding of why our business is not only robust but very special. We enjoy greater Client longevity and our people stay with us longer than is normal in our sector, and we have an enviable growth and debt repayment record. All of which have been evident again in the first half and are being explained more fully in our new website and materials.

New business continues to be our 'cream on top' with wins across the Group from such famous names as Mars, Neff, Reckitt Benckiser, Revlon, The Royal Mint and Universal Studios.

Trading results

Turnover ("billings") for the six months ended 30 June 2017 reduced by 4% to GBP71.2m (2016: GBP74.2m) in part due to year-on-year changes in the phasing of Client spending and in part due to the market trend away from traditional broad-based media expenditure in favour of more targeted activities. Billings include pass-through costs (e.g. 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.

Operating income ("revenue") increased 4% overall in the six months, to GBP33.8m (2016: GBP32.4m). Within our primary activity of Branding, Advertising and Digital, representing 80% of our Group revenue, growth was 8%, of which like-for-like growth was 6% with a further 2% from RJW. Growth in our other activities was more subdued, with both Events and Media likely to have a stronger weighting towards the second half of the year due to the phasing of Client campaigns.

Headline operating profits increased by 9% to GBP3.1m (2016: GBP2.8m), showing a modest but pleasing year-on-year improvement in margins. Our business is traditionally busier and more profitable in the second half and, with a number of initiatives aimed at improving profit margins, we anticipate maintaining this progress.

Adjustments to headline profits in 2017 totalled GBP1.1m (2016: GBP0.6m), explained further in Note 3. Among these adjustments are restructuring costs, flagged at the time of our 2016 results, totaling GBP0.6m (2016: GBPnil). After these adjustments, reported operating profits were GBP2.0m (2016: GBP2.2m).

After unchanged financing costs of GBP0.2m, headline profit before tax increased by 11% to GBP2.9m (2016: GBP2.6m); reported profit before tax was GBP1.8m (2016: GBP2.0m).

The Group estimates an effective tax rate on headline profits before tax of 22% (2016: 22%), resulting in an 11% increase in headline earnings to GBP2.2m for the six months (2016: GBP2.0m), and reported profit after tax of GBP1.3m (2016: GBP1.5m). Fully diluted headline EPS increased 11% to 2.58 pence (2016: 2.33 pence).

Balance sheet, cash flow and dividend

Net cash inflows from operating activities were GBP5.8m in the six months ended June 2017 (2016: GBP4.8m). These strong operating cash flows funded the settlement of acquisition obligations from prior years totalling GBP1.7m, initial acquisition consideration payments totaling GBP1.9m and also a GBP2.1m reduction in net debt to GBP9.2m. The Group has no further commitments to settle prior acquisition liabilities in the remainder of the year but the Group's normal phasing of working capital requirements is expected to result in a modest increase in net debt in the second half.

Following the purchase of RJW, the Group's acquisition obligations total GBP6.4m. All of this is dependent on post-acquisition earn-out profits, some to the end of 2020. GBP1.7m is expected to fall due within 12 months and a further GBP1.9m in the subsequent 12 months. The Directors believe that the strength of the Group's cash generation can comfortably accommodate these obligations. Furthermore, to achieve maximum earn-outs, the acquired Agencies would need to perform very strongly, which would generate much of the cash required to meet these obligations.

The Employee Benefit Trust continued to make periodic share purchases when appropriate and at 30 June 2017 held 1,422,265 ordinary shares.

Reflecting the growth in headline profits, the Directors have declared an interim dividend of 0.55p, representing a 10% increase over last year, payable on 1 December 2017 to shareholders on the register at 3 November 2017. The ex-dividend date is 2 November 2017.

Current trading and outlook

With our business becoming stronger, including good growth from our core business, we have a great platform from which to grow. We will continue to target further margin improvements, seek new opportunities, drive into new markets and upskill our offering. Underpinned by our strong cash generation, we will continue to explore accretive acquisition opportunities, or establish start-ups, that enhance our overall offering that supports our Clients wherever and however they need us to without being myrmidons. We again expect a strong second half to the year and are confident that we will deliver another year of growth.

David Morgan

Chairman

Condensed Consolidated Income Statement for the 6 months ended 30 June 2017

 
 
                                       6 months     6 months     Year ended 
                                             to           to 
                                        30 June      30 June    31 December 
                                           2017         2016           2016 
                                      Unaudited    Unaudited        Audited 
                              Note      GBP'000      GBP'000        GBP'000 
 
 TURNOVER                      2         71,237       74,162        144,096 
 
 Cost of sales                         (37,440)     (41,797)       (78,198) 
 
   OPERATING INCOME            2         33,797       32,365         65,898 
 
 Headline operating 
  expenses                             (30,710)     (29,537)       (58,341) 
                                    -----------  -----------  ------------- 
 HEADLINE OPERATING 
  PROFIT                       2          3,087        2,828          7,557 
 
 Exceptional items             4          (550)            -              - 
 Acquisition adjustments       5          (367)        (386)          (666) 
 Start-up costs                           (158)        (212)          (491) 
 
   OPERATING PROFIT                       2,012        2,230          6,400 
 
 Share of results of 
  associates and joint 
  ventures                                 (10)          (9)           (33) 
 
   PROFIT BEFORE INTEREST 
   AND TAXATION                           2,002        2,221          6,367 
 
 Net finance costs             6          (227)        (243)          (487) 
 
   PROFIT ON ORDINARY 
   ACTIVITIES BEFORE 
   TAXATION                               1,775        1,978          5,880 
 
 Taxation                      7          (470)        (518)        (1,369) 
 
   PROFIT FOR THE PERIOD                  1,305        1,460          4,511 
                                    -----------  -----------  ------------- 
 
 Attributable to: 
 Equity holders of 
  the parent                              1,286        1,440          4,434 
 Non-controlling interests                   19           20             77 
                                    -----------  -----------  ------------- 
                                          1,305        1,460          4,511 
                                    -----------  -----------  ------------- 
 
 Basic earnings per 
  share (pence)                8           1.55         1.74           5.36 
 Diluted earnings per 
  share (pence)                8           1.50         1.68           5.19 
 Headline basic earnings 
  per share (pence)            8           2.66         2.41           6.63 
 Headline diluted earnings 
  per share (pence)             8          2.58         2.33           6.41 
 
 

Condensed Consolidated Statement of Comprehensive Income for the 6 months ended 30 June 2017

 
 
                                 6 months     6 months     Year ended 
                                       to           to 
                                  30 June      30 June    31 December 
                                     2017         2016           2016 
                                Unaudited    Unaudited        Audited 
                                  GBP'000      GBP'000        GBP'000 
 
 PROFIT FOR THE PERIOD              1,305        1,460          4,511 
 
 Other comprehensive 
  income - items that 
  may be reclassified 
  separately to profit 
  or loss: 
 Exchange differences 
  on translation of 
  foreign operations                 (49)          (2)            214 
                              -----------  -----------  ------------- 
 TOTAL COMPREHENSIVE 
  INCOME FOR THE PERIOD             1,256        1,458          4,725 
 
 Attributable to: 
 Equity holders of 
  the parent                        1,242        1,435          4,578 
 Non-controlling interests             14           23            147 
                              -----------  -----------  ------------- 
                                    1,256        1,458          4,725 
                              -----------  -----------  ------------- 
 

Condensed Consolidated Balance Sheet as at 30 June 2017

 
                                            As at       As at         As at 
                                          30 June     30 June   31 December 
                                             2017        2016          2016 
                                        Unaudited   Unaudited       Audited 
                                 Note     GBP'000     GBP'000       GBP'000 
 FIXED ASSETS 
 Intangible assets                9        87,549      81,956        83,075 
 Property, plant and 
  equipment                                 3,391       4,384         3,531 
 Interests in joint                             -           7             - 
  ventures 
 Investments in associates                    314         341           324 
 Deferred tax assets                           28          45            45 
                                       ----------  ----------  ------------ 
                                           91,282      86,733        86,975 
                                       ----------  ----------  ------------ 
 CURRENT ASSETS 
 Stock and work in 
  progress                                    665         482           485 
 Trade and other receivables               36,741      36,268        32,611 
 Cash and short term 
  deposits                                  5,092       3,610         1,002 
                                       ----------  ----------  ------------ 
                                           42,498      40,360        34,098 
                                       ----------  ----------  ------------ 
 CURRENT LIABILITIES 
 Trade and other payables                (33,656)    (32,374)      (26,194) 
 Corporation tax payable                    (648)       (580)         (527) 
 Bank loans                       10      (2,500)     (1,750)       (2,250) 
 Acquisition obligations          11      (1,735)     (2,528)       (1,645) 
                                       ----------  ----------  ------------ 
                                         (38,539)    (37,232)      (30,616) 
                                       ----------  ----------  ------------ 
 NET CURRENT ASSETS                         3,959       3,128         3,482 
                                       ----------  ----------  ------------ 
 TOTAL ASSETS LESS 
  CURRENT LIABILITIES                      95,241      89,861        90,457 
 
   NON CURRENT LIABILITIES 
 Bank loans                       10     (11,803)    (11,242)      (10,023) 
 Other long term loans                          -        (76)          (76) 
 Obligations under 
  finance leases                            (173)       (257)         (216) 
 Acquisition obligations          11      (4,690)     (2,928)       (3,014) 
 Deferred tax liabilities                   (219)       (264)         (200) 
                                       ----------  ----------  ------------ 
                                         (16,885)    (14,767)      (13,529) 
                                       ----------  ----------  ------------ 
 NET ASSETS                                78,356      75,094        76,928 
                                       ----------  ----------  ------------ 
 
 CAPITAL AND RESERVES 
 Called up share capital                    8,436       8,412         8,412 
 Share premium account                     42,506      42,431        42,431 
 Own shares                                 (590)       (548)         (556) 
 Share option and growth 
  share reserve                               334         412           249 
 Foreign currency translation 
  reserve                                     151          46           195 
 Retained earnings                         27,048      23,890        25,740 
                                       ----------  ----------  ------------ 
 EQUITY ATTRIBUTABLE 
  TO EQUITY HOLDERS 
  OF THE PARENT                            77,885      74,643        76,471 
 Non controlling interests                    471         451           457 
                                       ----------  ----------  ------------ 
 TOTAL EQUITY                              78,356      75,094        76,928 
                                       ----------  ----------  ------------ 
 

Condensed Consolidated Cash Flow Statement for the 6 months ended 30 June 2017

 
 
                             6 months     6 months                Year ended 
                                   to           to 
                              30 June      30 June               31 December 
                                 2017         2016                      2016 
                            Unaudited    Unaudited                   Audited 
                              GBP'000      GBP'000                   GBP'000 
 
 Operating profit                            2,012       2,230       6,400 
 Depreciation and amortisation 
  charges                                    1,019       1,030       2,120 
 Movements in the fair 
 value of contingent consideration              40        (15)        (48) 
 (Profit) / loss on disposal 
  of property, plant and 
  equipment                                   (34)        (12)           4 
 Loss on disposal of intangible 
  assets                                         -           -           2 
 Non cash charge / (credit) 
  for share options, growth 
  shares and shares awarded                     85         118        (45) 
 Increase in receivables                   (3,786)     (4,746)     (1,037) 
 Increase in stock and 
  work in progress                           (180)        (21)        (24) 
 Increase in payables                        7,415       7,334       1,120 
                                       -----------  ----------  ---------- 
 OPERATING CASH FLOW                         6,571       5,918       8,492 
 Net finance costs                           (201)       (201)       (422) 
 Tax paid                                    (523)       (901)     (1,869) 
                                       -----------  ----------  ---------- 
 Net cash inflow from operating 
  activities                                 5,847       4,816       6,201 
                                       -----------  ----------  ---------- 
 
 INVESTING ACTIVITIES 
 Proceeds on disposal of 
  property, plant and equipment                 38          77          33 
 Purchase of property, 
  plant and equipment                        (461)       (613)       (914) 
 Investment in software 
  development                                (131)           -       (777) 
 Acquisition of subsidiaries 
  and joint ventures                       (1,910)       (325)       (466) 
 Payment of obligations 
  relating to acquisitions 
  made in prior periods                    (1,653)     (2,382)     (3,179) 
 Cash acquired with subsidiaries               610         147          65 
                                       -----------  ----------  ---------- 
 Net cash outflow from 
  investing activities                     (3,507)     (3,096)     (5,238) 
                                       -----------  ----------  ---------- 
 
 FINANCING ACTIVITIES 
 Dividends paid                                  -           -     (1,158) 
 Dividends paid to non-controlling 
  interests                                      -           -       (118) 
 Repayment of finance leases                  (41)        (46)        (90) 
 Increase in / (repayment 
  of) long term bank loans                   2,000         250       (500) 
 (Repayment of) / proceeds 
  from other long term loans                  (76)          76          76 
 Purchase of own shares 
  held in EBT                                 (84)       (172)       (169) 
                                       -----------  ----------  ---------- 
 Net cash inflow / (outflow) 
  from financing activities                  1,799         108     (1,959) 
                                       -----------  ----------  ---------- 
 Increase / (decrease) 
  in cash and cash equivalents               4,139       1,828       (996) 
 Exchange differences on 
  translation of foreign 
  subsidiaries                                (49)         (2)         214 
 Cash and cash equivalents 
  at beginning of period                     1,002       1,784       1,784 
                                       -----------  ----------  ---------- 
 Cash and cash equivalents 
  at end of period                           5,092       3,610       1,002 
                                       -----------  ----------  ---------- 
 
 

Condensed Consolidated Statement of Changes in Equity for the 6 months ended 30 June 2017

 
                                                     Share 
                                                    option                                      Total 
                                                       and        Foreign                attributable 
                                                    growth       currency                   to equity    Non-controlling 
                     Share      Share        Own     share    translation    Retained         holders           interest      Total 
                   capital    premium     shares   reserve        reserve    earnings       of parent            GBP'000     equity 
                   GBP'000    GBP'000    GBP'000   GBP'000        GBP'000     GBP'000         GBP'000                       GBP'000 
---------------  ---------  ---------  ---------  --------  -------------  ----------  --------------  -----------------  --------- 
 
 At 1 January 
  2016               8,361     42,268      (455)       298             51      22,414          72,937                428     73,365 
 
 Profit 
  for the 
  period                 -          -          -         -              -       1,440           1,440                 20      1,460 
 Exchange 
  differences 
  on 
  translation 
  of foreign 
  operations             -          -          -         -            (5)           -             (5)                  3        (2) 
---------------  ---------  ---------  ---------  --------  -------------  ----------  --------------  -----------------  --------- 
 Total 
  comprehensive 
  income 
  for the 
  period                 -          -          -         -            (5)       1,440           1,435                 23      1,458 
 
 New shares 
  issued                51        163          -         -              -           -             214                  -        214 
 Credit 
  for share 
  option 
  scheme                 -          -          -       114              -           -             114                  -        114 
 Own shares 
  purchased 
  by EBT                 -          -      (172)         -              -           -           (172)                  -      (172) 
 Shares 
  awarded 
  from own 
  shares                 -          -         79         -              -          36             115                  -        115 
 At 30 June 
  2016               8,412     42,431      (548)       412             46      23,890          74,643                451     75,094 
---------------  ---------  ---------  ---------  --------  -------------  ----------  --------------  -----------------  --------- 
 Profit 
  for the 
  period                 -          -          -         -              -       2,994           2,994                 57      3,051 
 Exchange 
  differences 
  on 
  translation 
  of foreign 
  operations             -          -          -         -            149           -             149                 67        216 
---------------  ---------  ---------  ---------  --------  -------------  ----------  --------------  -----------------  --------- 
 Total 
  comprehensive 
  income 
  for the 
  period                 -          -          -         -            149       2,994           3,143                124      3,267 
 Debit for 
  share option 
  scheme                 -          -          -     (163)              -           -           (163)                  -      (163) 
 Own shares 
  purchased 
  by EBT                 -          -       (40)         -              -           -            (40)                  -       (40) 
 Shares 
  awarded 
  from own 
  shares                 -          -         32         -              -          14              46                  -         46 
 Dividend 
  paid                   -          -          -         -              -     (1,158)         (1,158)              (118)    (1,276) 
---------------  ---------  ---------  ---------  --------  -------------  ----------  --------------  -----------------  --------- 
 At 31 December 
  2016               8,412     42,431      (556)       249            195      25,740          76,471                457     76,928 
---------------  ---------  ---------  ---------  --------  -------------  ----------  --------------  -----------------  --------- 
 Profit 
  for the 
  period                 -          -          -         -              -       1,286           1,286                 19      1,305 
 Exchange 
  differences 
  on 
  translation 
  of foreign 
  operations             -          -          -         -           (44)           -            (44)                (5)       (49) 
---------------  ---------  ---------  ---------  --------  -------------  ----------  --------------  -----------------  --------- 
 Total 
  comprehensive 
  income 
  for the 
  period                 -          -          -         -           (44)       1,286           1,242                 14      1,256 
 
 New shares 
  issued                24         75          -         -              -           -              99                  -         99 
 
 Credit 
  for share 
  option 
  scheme                 -          -          -        63              -           -              63                  -         63 
 Credit 
  for growth 
  share scheme           -          -          -        22              -           -              22                  -         22 
 Own shares 
  purchased 
  by EBT                 -          -       (84)         -              -           -            (84)                  -       (84) 
 Shares 
  awarded 
  from own 
  shares                 -          -         50         -              -          22              72                  -         72 
 At 30 
  June 
  2017               8,436     42,506      (590)       334            151      27,048          77,885                471     78,356 
---------------  ---------  ---------  ---------  --------  -------------  ----------  --------------  -----------------  --------- 
 
 

Notes to the unaudited Interim Report for the six months ended 30 June 2017

   1.   Accounting Policies 

Basis of preparation

The condensed consolidated interim financial statements for the six months ended 30 June 2017 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 2016 on pages 48-49. These are consistent with the accounting policies which the Group expects to adopt in its 2017 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 2017 and 30 June 2016 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 2016 have been extracted from the Group's Annual Report and Accounts 2016, 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 2016 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; 
   --      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

The Group increased to fourteen 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    6 months    Year ended 
                                 to          to 
                            30 June     30 June   31 December 
                               2017        2016          2016 
                          Unaudited   Unaudited       Audited 
                            GBP'000     GBP'000       GBP'000 
 
                                      Turnover 
 Business segment 
 Branding, Advertising 
  & Digital                  39,972      40,096        79,657 
 Media                       22,375      25,358        45,741 
 Public Relations             4,190       4,155         8,776 
 Events and Learning          4,700       4,553         9,922 
                             71,237      74,162       144,096 
                         ----------  ----------  ------------ 
 
 
                                   Operating 
                                     income 
 Business segment 
 Branding, Advertising 
  & Digital               27,339      25,394   51,740 
 Media                     1,964       2,209    4,061 
 Public Relations          3,452       3,285    6,777 
 Events and Learning       1,042       1,477    3,320 
                          33,797      32,365   65,898 
                         -------  ----------  ------- 
 
 
                                   Headline 
                                   Operating 
                                    Profit 
 Business segment 
 Branding, Advertising 
  & Digital               3,069        2,878      7,323 
 Media                      446          663      1,135 
 Public Relations           544          243        487 
 Events and Learning         26          104        325 
                          4,085        3,888      9,270 
 Central costs            (998)      (1,060)    (1,713) 
                          3,087        2,828      7,557 
                         ------  -----------  --------- 
 

Geographical segmentation

Whilst the Group continues to expand geographically, operating income from business based and executed outside the UK remains less than 10% of the total.

   3.   Reconciliation of Reported Profit to Headline Profit 
 
                            6 months            6 months           Year ended 
                                to                  to             31 December 
                             30 June             30 June               2016 
                               2017                2016              Audited 
                            Unaudited           Unaudited            GBP'000 
                             GBP'000             GBP'000 
                            PBT       PAT       PBT       PAT       PBT       PAT 
                        GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
 
 Headline profit          2,850     2,224     2,576     2,009     7,037     5,559 
 Exceptional items 
  (Note 4)                (550)     (429)         -         -         -         - 
 Acquisition-related 
  items (Note 5)          (367)     (366)     (386)     (383)     (666)     (655) 
 Start-up costs           (158)     (124)     (212)     (166)     (491)     (393) 
                       --------  --------  --------  --------  --------  -------- 
 Reported profit          1,775     1,305     1,978     1,460     5,880     4,511 
                       --------  --------  --------  --------  --------  -------- 
 

In order to provide a clearer understanding of underlying profitability, headline profits exclude exceptional items, acquisition-related costs and adjustments, and start-up costs. Start-up costs derive from organically started businesses and comprise the trading losses of such entities until the earlier of two years from commencement or when they show evidence of becoming sustainably profitable.

Start-up costs in 2017 relate to Mongoose Sports & Entertainment, Mongoose Promotions and April Six's new PR business in the USA. Start-up costs in 2016 related to the launch of Mongoose Sports & Entertainment and April Six's new ventures in Singapore and the USA.

   4.   Exceptional Items 
 
                          6 months    6 months     Year ended 
                                to          to    31 December 
                           30 June     30 June           2016 
                              2017        2016 
                         Unaudited   Unaudited        Audited 
                           GBP'000     GBP'000        GBP'000 
 
   Restructuring costs       (550)           -              - 
                        ----------  ----------  ------------- 
 

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 2017 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 for the second half of the year and beyond.

   5.   Acquisition Adjustments 
 
                                   6 months     6 months     Year ended 
                                         to           to    31 December 
                                    30 June      30 June           2016 
                                       2017         2016        Audited 
                                  Unaudited    Unaudited 
                                    GBP'000      GBP'000        GBP'000 
 
 Movement in fair value 
  of contingent 
  consideration                        (40)           15             48 
 Amortisation of other 
 intangible assets 
 recognised on acquisitions           (259)        (340)          (645) 
 Acquisition transaction 
  costs expensed                       (68)         (61)           (69) 
                                -----------  -----------  ------------- 
                                      (367)        (386)          (666) 
                                -----------  -----------  ------------- 
 
 

The movement in fair value of contingent consideration relates to a net (upward) / downward revision in the estimate payable to vendors of businesses acquired in prior years. Acquisition transaction costs relate to professional fees associated with the acquisitions.

   6.   Net Finance Costs 
 
                                6 months    6 months 
                                      to          to    Year ended 
                                 30 June     30 June   31 December 
                                    2017        2016          2016 
                               Unaudited   Unaudited       Audited 
                                 GBP'000     GBP'000       GBP'000 
 
 Net interest on bank 
  loans, overdrafts and 
  deposits                         (192)       (203)         (407) 
 Amortisation of bank 
  debt arrangement fees             (29)        (33)          (64) 
 Interest on finance leases          (6)         (7)          (16) 
                              ----------  ----------  ------------ 
 Net finance costs                 (227)       (243)         (487) 
                              ----------  ----------  ------------ 
 
   7.   Taxation 

The taxation charge for the period ended 30 June 2017 has been based on an estimated effective tax rate on headline profit on ordinary activities of 22% (30 June 2016: 22%).

   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 IAS 33: "Earnings per Share".

 
                                          6 months       6 months 
                                                to             to     Year ended 
                                           30 June        30 June    31 December 
                                              2017           2016           2016 
                                         Unaudited      Unaudited        Audited 
                                           GBP'000        GBP'000        GBP'000 
 Earnings 
 Reported profit for the 
  year                                       1,305          1,460          4,511 
 Attributable to: 
 Equity holders of the 
  parent                                     1,286          1,440          4,434 
 Non-controlling interests                      19             20             77 
                                             1,305          1,460          4,511 
                                     -------------  -------------  ------------- 
 
 Headline earnings (Note 
  3)                                         2,224          2,009          5,559 
 Attributable to: 
 Equity holders of the 
  parent                                     2,205          1,989          5,482 
 Non-controlling interests                      19             20             77 
                                     -------------  -------------  ------------- 
                                             2,224          2,009          5,559 
                                     -------------  -------------  ------------- 
 
 Number of shares 
 Weighted average number 
  of ordinary shares for 
  the purpose of basic 
  earnings per share                    82,843,306     82,577,286     82,651,400 
 Dilutive effect of securities(**) 
  : 
 Employee share options                  2,622,493      2,928,569      2,862,471 
                                     -------------  -------------  ------------- 
 Weighted average number 
  of ordinary shares for 
  the purpose of diluted 
  earnings per share                    85,465,799     85,505,855     85,513,871 
                                     -------------  -------------  ------------- 
 Reported basis: 
 Basic earnings per share 
  (pence)                                     1.55           1.74           5.36 
 Diluted earnings per 
  share (pence)                               1.50           1.68           5.19 
 Headline basis: 
 Basic earnings per share 
  (pence)                                     2.66           2.41           6.63 
 Diluted earnings per 
  share (pence)                               2.58           2.33           6.41 
                                     -------------  -------------  ------------- 
 

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.

** On 22(nd) February 2017, the Company announced details of a new Growth Share Scheme. If all the shares in the Scheme vest they will be exchanged into 5.7m Ordinary Shares, which will result in dilution. However, since the performance criterion is that the Company's share price must equal or exceed 75p for at least 15 days and this condition had not been satisfied at 30 June 2017, the Growth Shares are not included in the calculation of diluted earnings per share.

   9.   Intangible Assets 
 
                              30 June     30 June   31 December 
                                 2017        2016          2016 
                            Unaudited   Unaudited       Audited 
                              GBP'000     GBP'000       GBP'000 
 
 Goodwill                      84,074      79,527        79,779 
 Other intangible assets        3,475       2,429         3,296 
                               87,549      81,956        83,075 
                           ----------  ----------  ------------ 
 

Goodwill

 
                                 6 months    6 months 
                                    to 30       to 30     Year ended 
                                     June        June    31 December 
                                     2017        2016           2016 
                                Unaudited   Unaudited        Audited 
                                  GBP'000     GBP'000        GBP'000 
 
 Cost 
 At 1 January                      84,052      83,606         83,606 
 Recognised on acquisition 
  of subsidiaries                   4,295         197            457 
 Adjustment to consideration            -         (3)           (11) 
 At 30 June / 31 December          88,347      83,800         84,052 
                               ----------  ----------  ------------- 
 
 
 Impairment adjustment 
 At beginning and end 
  of period                4,273    4,273    4,273 
 
 Net book value           84,074   79,527   79,779 
                         -------  -------  ------- 
 

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 2017.

Other Intangible Assets

 
                            6 months to    6 months 
                                                  to    Year ended 
                                 30 June     30 June   31 December 
                                    2017        2016          2016 
                               Unaudited   Unaudited       Audited 
                                 GBP'000     GBP'000       GBP'000 
 
    Cost 
    At 1 January                   6,611       4,601         4,601 
    Transfer from property, 
    plant and equipment                -           -         1,467 
    Additions                        599           -           777 
    Disposals                          -           -         (234) 
    At 30 June / 31 December       7,210       4,601         6,611 
                                --------  ----------  ------------ 
 
    Amortisation and 
     impairment 
    At 1 January                   3,315       1,832         1,832 
    Transfer from property, 
    plant and equipment                -           -           853 
    Amortisation charge 
     for the period                  420         340           862 
    Disposals                          -           -         (232) 
    At 30 June / 31 December       3,735       2,172         3,315 
                                --------  ----------  ------------ 
 
    Net book value                 3,475       2,429         3,296 
                                --------  ----------  ------------ 
 

Other intangible assets consist of intellectual property rights, Client relationships and trade names.

10. Bank Loans and Net Debt

 
                                      30 June     30 June   31 December 
                                         2017        2016          2016 
                                    Unaudited   Unaudited       Audited 
                                      GBP'000     GBP'000       GBP'000 
 
 Bank loan outstanding                 14,375      13,125        12,375 
 Adjustment to amortised 
  cost                                   (72)       (133)         (102) 
                                   ----------  ----------  ------------ 
 Carrying value of loan 
  outstanding                          14,303      12,992        12,273 
 Less: Cash and short term 
  deposits                            (5,092)     (3,610)       (1,002) 
                                   ----------  ----------  ------------ 
 Net bank debt                          9,211       9,382        11,271 
                                   ----------  ----------  ------------ 
 
 The borrowings are repayable 
  as follows: 
 Less than one year                     2,500       1,750         2,250 
 In one to two years                   11,875       2,500         2,500 
 In more than two but less 
  than three years                          -       8,875         7,625 
                                       14,375      13,125        12,375 
 Adjustment to amortised 
  cost                                   (72)       (133)         (102) 
                                   ----------  ----------  ------------ 
                                       14,303      12,992        12,273 
 Less: Amount due for settlement 
  within 12 
  months (shown under current 
  liabilities)                        (2,500)     (1,750)       (2,250) 
                                   ----------  ----------  ------------ 
 Amount due for settlement 
  after 12 months                      11,803      11,242        10,023 
                                   ----------  ----------  ------------ 
 

11. Acquisitions

11.1 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 payments that may be due is as follows:

 
       Cash     Shares      Total 
    GBP'000    GBP'000    GBP'000 
 
 
 30 June 2017 
  Less than one year          1,735     -   1,735 
 Between one and two years    1,815    56   1,871 
 In more than two but 
  less than three years         560     -     560 
 In more than three but 
  less than four years        2,146   113   2,259 
                             ------  ----  ------ 
                              6,256   169   6,425 
                             ------  ----  ------ 
 

A reconciliation of acquisition obligations during the period is as follows:

 
                                 Cash     Shares      Total 
                              GBP'000    GBP'000    GBP'000 
 
 At 31 December 2016            4,659          -      4,659 
 New obligations created 
  in the period                 5,121        288      5,409 
 Obligations settled 
  in the period               (3,564)      (119)    (3,683) 
 Adjustments to estimates 
  of obligations                   40          -         40 
 At 30 June 2017                6,256        169      6,425 
                            ---------  ---------  --------- 
 
 

11.2 Acquisition of RJW & Partners Ltd

On 26 April 2017, the Group acquired the entire issued share capital of RJW & Partners Ltd ("RJW"), a pricing and market access consultancy operating in the healthcare sector. The fair value of the consideration given for the acquisition was GBP5,409,000, comprising initial cash and share consideration and deferred contingent cash and share consideration. Costs relating to the acquisition amounted to GBP68,000 and were expensed.

Maximum contingent consideration of GBP4,250,000 is dependent on RJW achieving a profit target over the period 1 January 2017 to 31 December 2020. The Group has provided for contingent consideration of GBP3,380,000 to date.

The fair value of the net identifiable assets acquired was GBP696,000 resulting in goodwill and other intangible assets of GBP4,713,000. 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     Fair value      Fair 
                                        value    adjustments     value 
-----------------------------------  --------  -------------  -------- 
                                      GBP'000        GBP'000   GBP'000 
-----------------------------------  --------  -------------  -------- 
 Net assets acquired: 
 Fixed assets                               2              -         2 
 Trade and other receivables              344              -       344 
 Cash and cash equivalents                610              -       610 
 Trade and other payables               (260)              -     (260) 
                                          696              -       696 
 Other intangibles recognised 
  at acquisition                            -            468       468 
                                          696            468     1,164 
 Goodwill                                                        4,245 
-----------------------------------  --------  -------------  -------- 
 Total consideration                                             5,409 
 Satisfied by: 
 Cash                                                            1,910 
 Shares                                                            119 
 Deferred contingent consideration                               3,380 
-----------------------------------  --------  -------------  -------- 
                                                                 5,409 
-----------------------------------  --------  -------------  -------- 
 
 

RJW & Partners Ltd contributed turnover of GBP508,000, operating income of GBP483,000 and headline operating profit of GBP176,000 to the results of the Group for the six month period ended 30 June 2017.

12. Post Balance Sheet Events

There were no material post balance sheet events.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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