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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Cagney | LSE:CGNY | London | Ordinary Share | GB00B0R80514 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0.35 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number : 8019D Cagney PLC 19 September 2008 CAGNEY Plc ("Cagney" or the "Company") INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2008 19 September 2008 Cagney, an integrated group of marketing services firms, today reports interim results for the six months ended 30 June 2008. Financial highlights * Gross profit increased by 18.8% to £4.4m (2007 - £3.7m). * Operating profit of £234,000 (2007 - operating loss of £180,000). * Profit before tax of £133,000 (2007 - loss before tax £436,000). * All operating segments profitable and growing Operational highlights * Steve Mattey appointed as CEO, replacing Paul Simons. * Kerry Simpson, joint founder of Cubo, joins board. * Tree and Cubo recruit business development directors with growing success. * More than 20 new clients added across the Group. * New business pipeline strong and growing. * AGL, our organically grown new business venture, wins its first clients. Commenting on the results, Chief Executive Steve Mattey said: "I am very pleased with our performance in the first half of 2008. Firstly, our financial performance shows that we have put last year behind us and are moving firmly in the right direction with our management of the business. Secondly, in a difficult economic climate, we have a strong pipeline of new business. Thirdly, we have re-structured ourselves internally to ensure that we have a robust business model to face the future. However, the first half of the year benefited from two significant items of revenue that are unlikely to be repeated in the second half, and parts of the Group are beginning to feel the effects of the difficult economic circumstances in which we are presently operating. Therefore, we must entertain the possibility that the second half will be less profitable than the first. Nevertheless, I am cautiously optimistic about the future. With the economy struggling there becomes an increased need for companies to communicate effectively to customers and potential customers. Cagney is in a very good place to respond to this need. We have also taken action to save costs amounting to several hundred thousand pounds, the benefit of which will be realised next year. We will continue to develop a consultancy-led approach to servicing our clients by exploiting the considerable expertise and talent across our group companies. We will also ensure that we are in a position to offer the full range of marketing services required to deliver brand and product messages to consumers in a fragmented and constantly evolving media market place. We will also continue to build the business by acquiring carefully selected complementary businesses; by stimulating organic growth from within the Group; and by aggressively pursuing new clients. Finally, a company is nothing without its people, and I would like to thank all of the staff within the Cagney Group for their continuing hard work and support." ENDS Enquiries: Cagney Plc Tel: 020 7637 4198 Steve Mattey, Chief Executive Officer Patrick Oram, Chief Financial Officer Smith & Williamson Tel: 0117 376 2213 Nick Reeve The Media Foundry Tel: 020 7612 1163 Anna Foster About Cagney Plc Cagney Plc is an integrated group of marketing services firms. It combines five businesses: Exedra (incorporating BrandAid as a division), Chick Smith Trott (advertising and design), Cubo (promotional marketing), The Media Foundry (public relations) and Tree (market research and data analysis). The Group floated on AIM in February 2006. www.cagneyplc.com CHIEF EXECUTIVE'S STATEMENT For the six months ended 30 June 2008 Introduction Cagney was formed in 2005 and floated on AIM in February 2006 with the strategy of building an integrated marketing services group, primarily to service domestic clients, as an alternative to the global multi-nationals. The Group presently comprises five businesses: Exedra (incorporating BrandAid as a division), Chick Smith Trott ("CST") (advertising and design), Cubo (promotional marketing), The Media Foundry ("TMF") (public relations) and Tree (market research and data analysis). Our strategy is to create a multi-disciplined marketing services group with a highly innovative and creative approach to servicing clients. We will do this by attracting and retaining exceptional human talent, by fostering a collaborative and integrated approach to servicing our clients, and by having strong financial and strategic management. Trading results Although the Group made considerable operational progress in 2007, the year was disappointing financially. The Group reported an operating loss of £547,000 that year, primarily because its cost base was too high in relation to its revenue. For the first half of 2008 I am pleased to report an operating profit of £234,000, compared with an operating loss of £180,000 in the first half of 2007. I am also pleased to report that gross profit increased by 18.8% from £3.7 million in the first half of 2007 to £4.4 million in the first half of 2008. All our trading segments contributed to that increase. Creative services increased its gross profit by 7.8%; public relations by 44.5%; and market research and data analysis by 34.8%. The Group also recorded a profit before tax for the first half of 2008 of £133,000, compared with a loss before tax of £436,000 in the first half of 2007. All our trading segments contributed to that profit. One of the biggest contributors to last year's loss was the very high level of central overheads - as much as £1.3m at the operating level. In recent months we have taken action that will reduce central overheads by several hundred thousand pounds, though we will have to wait until 2009 to realise the benefits of that action. However, 2008 will derive some benefit from cost reductions that took place at the end of 2007. In general we are determined to cut out all unnecessary expenditure, and ensure that the funds available to the Group are spent in building its long-term profitability. Deferred consideration Under the terms of most of the Group's acquisitions, the vendors can earn additional consideration if certain profit targets are achieved. TMF and Tree are eligible for deferred payments based on their 2008 profitability, and both are expected to qualify for additional payments. Part of the deferred consideration may be settled in shares at the Company's discretion. Financing The Group's balance sheet combines liabilities payable in cash with deferred consideration capable of being settled in shares. On this combined basis, the Group had net current liabilities at 30 June 2008 of £1.95m, and total net debt of £2.57m. However, if we remove liabilities expected to be settled in the form of shares, the Group's net current liabilities would be £1.53m, and the Group's total net debt would be £2.15m. The total net debt of £2.15m comprises a bank overdraft with Coutts of £0.39m; the £0.91m balance of the Coutts term loan; loan notes of £0.42m; and £0.95m of deferred consideration, partially offset by £0.52m of net current trading assets. The term loan is payable in equal monthly instalments of £28,712, and is scheduled to be fully repaid by May 2011. Interest is charged at 1.75% above Coutts' base rate from time to time. The loan and overdraft are secured by fixed and floating charges over the assets of the Group, with cross guarantees. People Paul Simons resigned as CEO and departed the Company on 12 May 2008, and I succeeded him in the role on 20 May. On 2 July I was delighted to welcome Kerry Simpson to the board of the Company. Kerry is one of the founders of Cubo, and brings tremendous business insight to the holding company team. Vicky Carrel departed the board on 30 June, and the Company on 11 July. The board of directors is now: Alex Hambro (non-executive Chairman) Steve Mattey (CEO) Patrick Oram (CFO) Kerry Simpson Robin Williams (non-executive) Mark Phillips joined Tree as commercial director in February 2008, and Cal Ledward joined Cubo as business development director in March 2008. Both have attracted new business to the Group, increasingly working in teams with other Group companies. New Business New business is the life blood of our industry and we have made significant improvements to the energy and focus on new client acquisition. This is reflected in the addition of 22 new clients across the Group in the first half of the year. The scale and quality of opportunities continually improve, and currently all our businesses are particularly busy with potential new clients. However, we are not complacent in this matter, as there is, without doubt, a shiver running through the economy. This presents both threats and opportunities to marketing services companies. The best defences against a challenging marketplace are to provide excellence to existing clients, and to aggressively pursue new business opportunities. During these difficult times, brands need to communicate with their customers and potential customers with effectiveness and vigour. Cagney is in a good place to respond to this need, and we will actively position ourselves as an innovative and creative communications partner for these companies. Cross Referral One of our core goals is the growth of cross referral and this is improving rapidly. We have established a team drawn from each division within the Group with two purposes - to co-operate on any new business opportunity by sourcing skills and case studies from across the Group, and to seek to maximise any potential opportunities within the existing client base at Cagney. This approach has already resulted in one significant business win. Dividend No interim dividend is recommended. Outlook The Group has enjoyed a profitable first half of the year, and we are hopeful of adding further profit in the second half. However, the first half benefited from two significant items of revenue that are unlikely to be repeated in the second half, and parts of the Group are beginning to feel the effects of the difficult economic circumstances in which we are presently operating. Therefore, we must entertain the possibility that the second half will be less profitable than the first. Nevertheless, I am cautiously optimistic about the future. With the economy struggling there becomes an increased need for companies to communicate even more effectively to customers and potential customers. Cagney is in a very good place to respond to this need. Next year will also benefit from the considerable cost savings put in place this year. Steve Mattey Chief Executive Officer 19 September 2008 CONSOLIDATED INCOME STATEMENT For the six months ended 30 June 2008 6 months ended 6 months ended Year ended 30 June 2008 30 June 2007 31 (unaudited) (unaudited) December 2007 (audited) Note Continuing Acqui-sitions Total Operations £000 £000 £000 £000 £000 Revenue 2 6,463 - 6,463 5,397 11,251 Direct costs (2,084) - (2,084) (1,712) (3,724) Gross profit 2 4,379 - 4,379 3,685 7,527 Administrative expenses (4,145) - (4,145) (3,865) (8,074) Operating profit/(loss) 234 - 234 (180) (547) Interest receivable 8 8 13 Interest payable and similar 3 (106) (101) (188) charges Impairment of goodwill - - (2,000) Finance cost of deferred 8 (3) (163) (368) consideration Profit/(loss) on ordinary 2 133 (436) (3,090) activities before taxation Tax (charge)/credit on 4 (39) 87 147 profit/(loss) on ordinary activities Profit/(loss) on ordinary 94 (349) (2,943) activities after taxation Earnings/(loss) per ordinary share: 6 months ended 6 months ended Year ended 30 June 2008 30 June 2007 31 (unaudited) (unaudited) December 2007 (audited) Basic 5 0.059p (0.37p) (2.6p) Diluted 5 0.052p (0.37p) (2.6p) CONSOLIDATED BALANCE SHEET As at 30 June 2008 30 June 2008 30 June 2007 31 December 2007 (unaudited) (unaudited) (audited) Note £000 £000 £000 Non-current assets Goodwill 6 9,546 10,764 10,509 Tangible assets 240 211 249 9,786 10,975 10,758 Current assets Trade and other receivables 2,859 2,864 2,972 Cash at bank and in hand - 98 - 2,859 2,962 2,972 Current liabilities Trade and other payables (2,301) (2,055) (2,181) Current tax liabilities (33) (64) (142) Bank overdrafts, loans and 7 (1,103) (738) (1,120) loan notes Short term provisions 8 (1,374) (3,055) (3,636) (4,811) (5,912) (7,079) Net current liabilities 9 (1,952) (2,950) (4,107) Total assets less current 7,834 8,025 6,651 liabilities Non-current liabilities Deferred taxation - (2) - Bank loans and loan notes 7 (613) (913) (764) Long term provisions - (423) (1,773) Total net assets 2 7,221 6,687 4,114 Capital and reserves Called up share capital 10 2,183 1,341 1,344 Share premium 8,153 5,974 5,986 Share options reserve 13 - 6 Merger reserve (150) (150) (150) Profit and loss account (2,978) (478) (3,072) Equity shareholders' funds 7,221 6,687 4,114 CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 June 2008 6 months ended 6 months ended Year ended 30 June 2008 30 June 2007 31 (unaudited) (unaudited) December 2007 (audited) Note £000 £000 £000 Net cash flow from operating 11 524 (166) (472) activities Investing activities Interest received 8 8 13 Purchases of property, plant (53) (27) (116) and equipment Purchase of business and - (880) (882) assets Settlement of deferred (70) (1,572) - consideration Net cash used in investing (115) (2,471) (2,618) activities Taxation UK corporation tax paid (164) - - Financing activities Interest paid (76) (56) (123) Proceeds on issue of shares - 1,661 1,811 (net of expenses) Proceeds from loan financing - 1,200 1,200 Loan repayments (139) (461) (606) Net cash relating to financing (215) 2,344 2,282 activities Net change in cash and cash 30 (293) (808) equivalents Net cash and cash equivalents (417) 391 391 at beginning of period Cash and cash equivalents at (387) 98 (417) end of period Analysed as: Cash at bank and in hand and - 113 - short term deposits Bank overdrafts 7 (387) (72) (417) Cash and cash equivalents at (387) 41 (417) end of period CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY For the six months ended 30 June 2008 Called up share Share premium Share options Other reserves Profit and loss account Total capital account reserve £000 £000 £000 £000 £000 £000 At beginning of period 1,344 5,986 6 (150) (3,072) 4,114 Retained profit for the period - - - - 94 94 Provision for share based - - 7 - - 7 payment Shares issued during the 839 2,167 - - - 3,006 period At end of period 2,183 8,153 13 (150) (2,978) 7,221 Other reserves represents the merger reserve arising from the prior year merger of Cagney Plc with Paul Simons & Partners Limited. Merger relief under S131 of the Companies Act has been taken and the premium arising on the issue of these shares has been disregarded as permitted under S133 of the Companies Act. NOTES TO THE INTERIM ACCOUNTS 1. Basis of preparation The consolidated interim financial statements, which were approved by the board on 19 September 2008, have been prepared under the accounting policies set out in the Group's 2007 Annual Report, and in accordance with IAS34 "Interim Financial Reporting". The information relating to the six months ended 30 June 2008 is unaudited and does not constitute statutory accounts but has been reviewed by the Company's auditors in accordance with the Auditing Practices Board Bulletin 1999/4 "Review of Interim Financial Information". The accounts for the year ended 31 December 2007 have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. 2. Segment reporting 6 months ended 6 months ended Year ended 30 June 2008 30 June 2007 31 (unaudited) (unaudited) December 2007 (audited) £000 £000 £000 Gross profit Creative services 2,431 2,256 4,280 Public relations 643 445 1,046 Market research and data 1,305 968 2,201 analysis Head office - 16 - 4,379 3,685 7,527 Profit/(loss) on ordinary activities before taxation Creative services 412 175 210 Public relations 201 (26) 57 Market research and data 288 170 348 analysis Head office (768) (755) (1,705) Impairment provision - - (2,000) 133 (436) (3,090) Net assets Creative services 1,024 1,143 1,122 Public relations 271 167 202 Market research and data 300 170 277 analysis Head office 5,626 5,207 2,513 7,221 6,687 4,114 The Group's revenue was earned from clients based in the following geographical markets: UK Rest of World Total £000 £000 £000 Six months ended 30 June 2008 Creative services 2,687 1,343 4,030 Public relations 663 - 663 Market research and data analysis 1,770 - 1,770 5,120 1,343 6,463 Six months ended 30 June 2007 Creative services 2,167 1,564 3,731 Public relations 458 - 458 Market research and data analysis 1,192 - 1,192 Head office - 16 16 3,817 1,580 5,397 Year ended 31 December 2007 Creative services 4,603 2,813 7,416 Public relations 1,113 - 1,113 Market research and data analysis 2,722 - 2,722 8,438 2,813 11,251 3. Interest payable and similar charges 6 months ended 6 months ended Year ended 30 June 2008 30 June 2007 31 (unaudited) (unaudited) December 2007 (audited) £000 £000 £000 Interest on bank overdrafts 56 35 76 and loans Interest on loan notes 41 42 22 Interest on other loans 9 24 90 106 101 188 4. Tax on profit on ordinary activities The tax charge for the six months ended 30 June 2008 has been based on an estimated effective tax rate for the full year of approximately 29%, applied to the profit on ordinary activities before deduction of the finance charge, which does not attract corporation tax relief. 5. Earnings per share The calculation of the basic and diluted earnings per share is based on the following data: 6 months ended 6 months ended Year ended 30 June 2008 30 June 2007 31 (unaudited) (unaudited) December 2007 (audited) Earnings/(loss) £000 £000 £000 Earnings/(loss) for the 94 (349) (2,943) purposes of basic earnings per share, being net profit or loss attributable to equity holders Interest and redemption n/a 29 34 premium on convertible loan notes Adjusted earnings/(loss) for 94 (320) (2,909) diluted earnings per share 6 months ended 6 months ended Year ended 30 June 2008 30 June 2007 31 December (unaudited) (unaudited) 2007 (audited) Number of shares Number Number Number Weighted average number of 160,210,521 94,414,059 114,497,772 ordinary shares for basic earnings per share Effect of dilutive potential ordinary shares: Shares anticipated to be issued 21,000,000 60,239,019 89,559,339 in respect of deferred acquisition consideration Share options 531,768 - - Convertible loan notes n/a 2,500,000 2,500,000 Weighted average number of 181,742,289 157,153,078 206,557,111 ordinary shares for diluted earnings per share The shares anticipated to be issued in respect of deferred consideration are assumed converted at a share price on 30 June 2008 of 2p per share. 6. Movement on goodwill The movement on goodwill during the period is set out below. £000 Estimated deferred consideration in respect of Tree (216) Estimated deferred consideration in respect of The Media Foundry (747) (963) 7. Bank overdrafts, loans and loan notes Bank overdrafts, loans and loan notes comprised the following: As at: 30 June 2008 30 June 2007 31 December 2007 (unaudited) (unaudited) (audited) £000 £000 £000 Bank overdraft 387 - 417 Bank loan 906 1,189 1,044 Convertible loan notes 187 200 200 Loan notes issued in 236 262 223 settlement of deferred consideration 1,716 1,651 1,884 Analysed as: Current liabilities 1,103 738 1,120 Non-current liabilities 613 913 764 1,716 1,651 1,884 The bank loan is repayable in monthly instalments of £28,712, and interest is charged at 1.75% above Coutts' base rate from time to time. 8. Provisions The Directors' best estimate of the fair value of future deferred consideration is set out below: Shares Cash Total £000 £000 £000 At beginning of period 3,937 1,472 5,409 Adjustments to existing provisions (511) (448) (959) Deferred consideration settled during the period (3,006) (70) (3,076) At end of period 420 954 1,374 The future obligations have been discounted using a rate of 4.65%, and the total obligation expected to be paid before discounting is £1.389 million, of which £773,000 is dependent on future profitability. The discounting charge taken to the profit and loss account for the period was £3,000. All the above provisions fall due for settlement within the next twelve months. 9. Net current liabilities A significant portion of the Group's net current liabilities are capable of settlement by the issue of shares. Those liabilities expected to be settled in the form of shares are indicated below. As at: 30 June 2008 30 June 2007 31 December 2007 (unaudited) (unaudited) (audited) £000 £000 £000 Expected to be settled in the form of: Shares 420 2,689 2,960 Cash 1,532 261 1,147 Net current liabilities 1,952 2,950 4,107 10. Share capital The Company's authorised share capital is £4 million, comprising 400 million ordinary shares of 1p each. Called-up, allotted and fully-paid Number of 1p Nominal ordinary value shares £000 At beginning of period 134,394,338 1,344 Issued in part settlement of the consideration for 27,914,110 279 the business and assets of Tree Issued in part settlement of the deferred 55,988,484 560 consideration for Cubo At end of period 218,296,932 2,183 11. Net cash flow from operating activities 6 months ended 6 months ended Year ended 30 June 2008 30 June 2007 31 (unaudited) (unaudited) December 2007 (audited) £000 £000 £000 Operating profit/(loss) 234 (180) (547) Charge in respect of share 7 - 6 option scheme Depreciation 62 44 103 Decrease/(increase) in debtors 131 (588) (710) Increase in creditors 90 558 676 Net cash flow from operating 524 (166) (472) activities 12. Related party transactions Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Other transactions with related parties are described below. Steve Mattey became a director of the Company on 20 May 2008. On that date he was owed £313,000 in respect of deferred consideration for Tree. Interest is accruing on the outstanding balance at a rate of two percent above the base rate of the Bank of England. Mr. Mattey is expected to become entitled to additional consideration, payable in cash and shares, in respect of Tree's financial performance during 2008. Kerry Simpson became a director of the Company on 2 July 2008. On 30 June 2008 and on the date of his appointment he was owed £118,000 in the form of a loan note and accrued premium in respect of deferred consideration for Cubo. Interest is accruing on the outstanding balance at a rate of two percent above the base rate of the Bank of England. During the period £13,334 of convertible loan notes were repaid to Alex Hambro, non-executive Chairman of the Company. At 30 June 2008 £86,666 of the convertible loan notes remained outstanding. Interest is accruing on the outstanding balance at a rate of two percent above the base rate of the Bank of England. 13. Availability to public Copies of these interim results will be available at the Company's offices at Holden House, 57 Rathbone Place, London W1T 1JU, and at the Company's website at www.cagneyplc.com. This information is provided by RNS The company news service from the London Stock Exchange END IR QVLFFVKBBBBZ
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