IMSG
International Marketing & Sales Group Ltd
Unaudited Results for the Six Months ended 30 June 2008
Strong Revenue Growth with Increased Gross Margin
International Marketing & Sales Group Plc ("IMSG" or the "Group"), the emerging
markets focused sales and marketing company, today announces unaudited results
for the six months ended 30 June 2008.
Financial Highlights
-- Turnover up 67% to US$100.7million (2007: US$60.4 million)
-- Gross profit up 69% to US$30.7million (2007: US$18.1 million)
-- Underlying pre-tax loss of US$3.4 million before US$6 million impairment
of IMSG's holding in Turkish agency RPM Radar "RPM", US$0.5 million
write down on trading investments and US$1.0 million discounting loss
charged on deferred payments.
-- Net cash of US$11.0 million (US$8.3 million as at 31 December 2007)
-- Net cash generated from operating activities of $3.9m
-- 82% of forecast Group turnover for the second half of 2008 is either
booked or in the process of being contracted
Operational Highlights
-- In the first six months of 2008 the Group successfully completed three
acquisitions:
-- Elektrik, a leading Turkish specialised sales & marketing agency
-- ONE Media, one of the leading direct marketing agencies in Sweden
-- EY ZHN, a leading consumer experiential business that enables the
group to continue to develop this service offering and enable other
markets to take advantage of the Greek market
-- Provision of additional services to Metro and Oriflame
-- Secondary listing on the Swedish stock exchange AktieTorget
-- Re-organisation of the Russian business with the establishment of a
Russian Management Board chaired by Mark Huntley, who is one of three
joint Managing Directors running the business with Michael Green,
Managing Director IMSG International and Adrian Stewart, Managing
Director Specialist Service Area Development, IMSG International
Commenting on the results, Greg Thain, Chairman of the Group said:
"The first six months of 2008 has been a turbulent period for IMSG. The Group
has completed its restructuring in Russia and now has consolidated its new
acquisitions and is ready for a phase of strong organic growth. Increases in
turnover of 67% and in gross profit of 69% highlight the development and dynamic
growth of the Group. More international sales and integrated services have been
achieved in the Group than ever before and consequently, an international sales
team with participants from UK, Russia, Sweden and Turkey has been formed.
During the period, IMSG's international sales force has succeeded in extending
the range of services provided to Metro and Oriflame."
"The results for the first half reflect the unanticipated disruption to the
business in Russia as a consequence of the previously announced loss of a number
of key personnel, other provisions that we have considered it prudent to make
and the need to write down our investment in the above the line agency RPM in
Turkey. RPM has lost two major clients and the political environment in Turkey
in the first half has made it difficult to replace this lost business as clients
have held back on advertising spending. We are now considering our strategic
options with regard to RPM, including the possibility of a near-term disposal."
"The acquisitions of ONE Media, Elektrik and EY ZHN during the period reinforce
the board's strategy to focus on sales driven marketing in emerging markets.
IMSG now has the platform from which to serve multinational clients in 18
countries. The objective of this strategy is to make IMSG the tenth largest
marketing services group worldwide by 2010. We believe, with our focus on sales
driven marketing in emerging markets, that we are better placed to grow than our
competitors."
Certain statements in this press release are forward looking statements. Forward
looking statements involve evaluating a number of risks, uncertainties or
assumptions that could cause actual results to differ materially from those
expressed or implied by those statements. Forward looking statements regarding
past trends, results or activities should not be taken as a representation that
such trends, results or activities will continue in the future. Undue reliance
should not be placed on forward looking statements.
Enquiries
Johanna Fagrell-Kohler Tel: +46 734 100 550
Terry Livingstone Tel: +44 (0)20 7735 6788
International Marketing & Sales Group Limited
Emily Bruning/Andrew Best
Shared Value Limited Tel: +44 (0)20 7321 5010
Mark Williams / Henry Fitzgerald-O'Conner
Canaccord Adams Limited Tel: +44 (0)20 7050 6500
Notes to Editors
-- IMSG was founded in 1996 and the Group was admitted to trading on AIM on
6 December 2005.
-- The Group's clients include multinational and first tier local companies
operating in FMCG, telecommunications, retail trade, banking and
finance, automotive, consumer electronics and pharmaceutical industries.
-- IMSG currently has over 40 offices predominantly in emerging markets:
Moscow, Saint Petersburg, Yekaterinburg, Kazan, Nizhniy Novgorod,
Novosibirsk, Rostov-on-Don, Samara, Krasnodar (Russia), Kiev (Ukraine),
Almaty, Astana (Kazakhstan), Dushanbe (Tajikistan), Tashkent
(Uzbekistan), Erevan (Armenia), Belgrade (Serbia) Istanbul (Turkey), New
Delhi, Mumbai, Bangalore, Chennai, Kolkata, Hyderabad (India), Kuala
Lumpur (Malaysia), Dubai (UAE), Doha (Qatar), Budapest (Hungary),
Bucharest (Romania), Athens (Greece), Sofia (Bulgaria) London (UK),
Stockholm, Malmo (Sweden) and Barcelona (Spain).
-- Further information about the Group is available on its website at:
http://www.imsg.co.uk
Chairman's statement
On Admission to trading on AIM in December 2005, we set out our strategy for
growth, to be achieved both organically and by acquisition. In line with this
strategy, I am pleased to be able to report the completion of three major
acquisitions in the first eight months of 2008, bringing our total number of
acquisitions to 16 from admission.
In May 2008, IMSG completed its offer for the entire issued share capital of ONE
Media, one of the leading direct marketing companies in the Nordic Region. ONE
Media's expertise in the field of direct marketing, which is the fastest growing
form of marketing communications, complements IMSG's existing offering and IMSG
is now very well positioned to meet the demand among international and local
businesses for direct marketing services in emerging markets. IMSG is now a full
service provider able to offer multi channel marketing services to its customer
base across a wider geographic footprint stretching from the Nordic Region
across Eastern Europe into Russia and Turkey.
The second acquisition, also completed in May, was of Elektrik, the Turkish
events organising agency, which was established in 2006. Its core businesses are
event planning/organising, below the line marketing communication services and
advertisement agency services. Amongst its clients are some prestigious Turkish
banks and multinational companies. Elektrik has 20 permanent employees and its
last audited accounts, for the year ended 31 December 2007, show turnover of
US$10,288,008, a profit after tax of US$247,887 and gross assets of
US$1,549,268. Elektrik is one of the fastest growing Marketing Communication
Services Company in the Turkish market. The acquisition provides IMSG with an
expanded presence in the fast-growing Turkish market and the agency has been
integrated under IMSG's umbrella of event businesses branded One2Remember.
In June, IMSG completed the third acquisition, of EY ZHN, the Athens based
events production and Management Company. EY ZHN is a leading event management
and production company in the Greek market with activities in the Balkans,
Russia and the Middle East. It has significant owned resources, infrastructure,
international clients and experience of major projects in all these markets and
had turnover for 2007 of US$4 million, EBITDA of US$60,000 and Net Assets of
US$1,600,000. EY ZHN will enter the One2Remember international network and will
lead the expansion and development of the One2Remember International event
business of IMSG in the Balkans, the Middle East, Africa and Cyprus.
Since its IPO the Group has already completed 16 major acquisitions:
-- IMCA (Russian market research agency)
-- RPM (Turkish Above-the-Line advertising agency)
-- Candid Marketing (Indian Below-the-Line marketing agency)
-- Storewars (worldwide business simulation and training programme)
-- HPS Marketing (Below-the-Line marketing agency in Hungary)
-- Tarantula (Russian Below-the-Line agency)
-- MAPP (Turkish Below-the-Line agency)
-- PRAGMA (Strategy consultancy firm)
-- FRIENDS (Romanian full service communications agency)
-- V+0 (Greek PR & Corporate Communication consultancy)
-- ZAP (a leading Turkish internet business)
-- Shared Value (a Financial PR consultancy)
-- BIP (Sales & Marketing outsourcing company in Romania)
-- One Media (Swedish Direct Marketing company)
-- Elektrik (Event agency in Turkey)
-- EY ZHN (a Greek event agency)
Brand Portfolio
The brand portfolio has been expanded to accommodate and facilitate strong
growth both in our existing markets and into new territories, and provide a full
set of services to our clients:
-- Outsourced Sales & Trade Marketing
-- Events & Consumer Marketing
-- Multi Channel Marketing
-- Retail Marketing & Consultancy
-- PR & IR
Outlook
The full year will reflect a number of positive steps taken during the year,
namely the fulfilment of a unified and integrated service offering in Russia
with continued business success and significant client contracts; the
establishment of One2remember as an international offering with client contracts
covering a number of territories; the integration of multi-channel marketing
using the expertise of ONE Media and Zap Medya to drive cutting edge
communication in the digital sphere across all our regions of contact; the
development of our retail offering underpinned by the expertise of Pragma
leading us into the Middle East and the increased service offering in our
existing markets such as Romania and Turkey.
We have traded through a disruptive first half year during 2008 while still
achieving significant year on year growth and, going forward, we will illustrate
the real value opportunity to shareholders that we believe IMSG provides.
IMSG now expects its turnover in 2008 will be at least US$230 million and its
underlying pre-tax profit before impairment charges will be at least US$8
million.
Greg Thain
Executive Chairman, IMSG
Statements of IMSG Managing Directors
Russia
Mark Huntley, Chairman of IMSG Russia Management Board
"A year of two distinct halves but a stronger business resulting, with the
foundation to provide healthier, better balanced growth in the Russia and former
CIS Marketing Services sector. "
That's very much my own assessment of how we will be looking back at this period
in our development, I sincerely believe that the apparent adversity of losing
people will, in the near term, result in a more profitable and sustainable
business for IMSG in the region. The fundamentals in our business units, namely
experienced, innovative and competitive service offerings provided to the
leading clients in their industries, remain intact. We have 14 business units
now operating together out of just two offices in Moscow, with all the benefits
of operational synergy and business referral across them. Philips, Total, P&G,
OBI, Oriflame & SAB Miller are some of the examples of the significant business
wins achieved so far in 2008, all of which will have significant impact on the
second half results and carry forward into 2009.
Our new Management Board is focused on motivating and incentivising profitable
growth amongst the units and developing new service offerings which will be
launched in the second half of 2008. Healthy demand for diversified and
specialist agency services is fuelling these new initiatives - they are truly
market and client led enterprises. As a group, we are in a unique position to
capitalise on such growth areas with our geographical footprint, with 12 offices
in the region, and the vast array of clients across our different service areas.
The combination of IMSG's unique international business connections, with the
relevant talent and local resources, ensures we fulfil the pledge of our sales
pitch: "The most local of the international agencies and the most international
of the local agencies."
I am highly confident of our abilities to ensure that Russia & former CIS
countries remain at the forefront of the growth of the Group, delivering
increasingly sophisticated and highly competitive sales & marketing solutions
for our clients in the region.
Turkey, Romania and Hungary
Michael Green, Managing Director, IMSG International
Turkey
It has been a disappointing year so far for our advertising agency RPM, with
losses of 2 major clients, Yapi Kredi and Ulker. The political environment in
the first half has made it difficult to replace this lost business as clients
have held back on advertising spending. We hope for better performance in the
second half, but are also considering several long term strategic options
including a possible near term disposal of the agency.
We have seen strong performances in our other Turkish businesses in the first 6
months. Our online media agency, Zap Medya and its creative online agency,
Bezoone have both seen good results. Client wins include Hyundai, Fox TV, Coca
Cola, Bilyoner, Turk Telekom, Air France. Zap Medya will also be spearheading
the expansion of online interactive services across our markets and is currently
working on a Russian market strategy with IMSG Russia. Our trade marketing
agency, MAPP has seen a highly successful period continuing its excellent
service for its main client, Coca Cola, as well as major new client wins for
Samsung, TurkCell and Kipa (Tesco). In April we completed the acquisition of
Elektrik, a leading events and experiential agency. This greatly strengthens our
offer to the Turkish market and now gives complete international client coverage
for IMSG's One2Remember events network. Yapi Kredi is Elektrik's lead client and
major wins for the agency this year include BAT, Aviva and Ulker.
Romania
Romania is showing one of best GDP and industry growth rates in the whole of
Europe and our local agencies are both growing ahead of the industry. IMSG
Bucharest continues to perform well in 2008 with its strengthened market offer
of strategic communications, advertising, media services branding, events,
promotions, production and retail services. Its clients include Unilever,
European Drinks, Canon, Vodafone, and MKB. Major new wins include Dimri and
Metro CC, the latter being supported strongly by IMS Retail internationally. BIP
Grup "BIP", acquired at the end of 2007, offers trade marketing and outsourcing
services that complement the marketing services offered by IMSG Bucharest. BIP
has shown excellent growth ahead of budget expectations. Its clients include
Coca Cola, Tuborg, Philip Morris, L'Oreal and Kraft.
Hungary
Despite the Hungarian economy being under pressure for the last 18 months, HPS
Group has performed extremely well in the first half. A well diversified offer
of marketing and sales services has helped support clients in a slow market and
has allowed HPS to grow, especially in outsourced sales services and marketing
activity involving planning and creativity. HPS's clients include BAT, Tesco,
Cadbury, Pepsi, P&G, Samsung, Friesland, Zwack, Borsodi, HP and Pfizer.
Specialist Service Areas
Adrian Stewart, Managing Director, Specialist Service Area Development, IMSG
International
The first half of 2008 saw continued growth within IMS Retail in Russia and the
launch of this business unit in two new countries within the IMSG network. In
Russia the team have consolidated our long-term strategic relationship with
Metro CC and expanded several core business areas with this client, including
price monitoring and non food consultancy. In addition the team has picked up
major new projects for two of the biggest Russian chains, 7th Continent
(supermarket) and Lenta (hypermarket).
IMS Retail also launched operations in Turkey and Romania in the first half of
2008, building on its relationship with Metro CC in Romania and, in Turkey, IMS
Retail has been launched with a non food consultancy pilot with Tesco-Kipa.
ITM in Russia has recovered strongly in the wake of senior management defections
in Q1 2008 with the acquisition of several major new accounts in Q2 and Q3 08
including Philips and Total. In addition this business unit has significantly
grown a number of existing clients including Nokia and SAB Miller and is in a
strong position going forward into 2009.
In August 2008 we communicated our new business development strategy for the
next 12 months to the Group. This approach is already starting to bear fruit. In
2008 IMSG opened global negotiations with a major international business to
provide field marketing solutions in four major IMSG markets: Russia, Turkey,
Hungary and Romania.
General Information
These unaudited interim accounts have been approved for issue by the Board of
Directors on 27 August 2008.
The 2008 interim accounts will be circulated to all shareholders. Further copies
can be obtained from the registered office of the Company in Jersey at 47,
Esplanade, Jersey JE1 0BD. They may also be accessed via the investor section of
the Company's website at http://www.imsg.co.uk
Certain statements in this press release are forward looking statements. Forward
looking statements involve evaluating a number of risks, uncertainties or
assumptions that could cause actual results to differ materially from those
expressed or implied by those statements. Forward looking statements regarding
past trends, results or activities should not be taken as a representation that
such trends, results or activities will continue in the future. Undue reliance
should not be placed on forward looking statements.
International Marketing & Sales Group Plc
Consolidated Income Statement
Year to 30 Year to 30 Year ended
June June
In thousands of US Dollars 31 December
Note 2008 2007 2007
------------------------------------------------------------------------------------------
Continuing operations:
Revenue 1 100 746 60 389 155 235
Cost of sales 70 061 42 272 104 030
------------------------------------------------------------------------------------------
Gross profit 1 30 685 18 117 51 205
Other operating income (1 134) (521) (789)
General and administrative expenses 33 844 17 395 42 139
Research and development costs 0 182 -
Other operating expenses 7 251 228 147
------------------------------------------------------------------------------------------
Operating profit (9 276) 833 9 708
Finance income 485 493 985
Finance costs 2 116 231 1 164
Share of result of associates
------------------------------------------------------------------------------------------
Profit/(loss) before income tax (10 907) 1 095 9 529
Income tax expense 2 575 354 2 553
------------------------------------------------------------------------------------------
Profit/(loss) for the year (11 482) 741 6 976
------------------------------------------------------------------------------------------
Profit/(loss) is attributable to:
Equity holders of the Company (11,604) 644 5 611
Minority interest 122 97 1 365
------------------------------------------------------------------------------------------
Profit/(loss) for the year (11,482) 741 6 976
------------------------------------------------------------------------------------------
Earnings per share:
Basic (12.39) pence 0.87 pence 7.00 pence
Diluted (12.20) pence 0.85 pence 6.88 pence
International Marketing & Sales Group Plc
Consolidated Balance Sheet
Six Months Six Months Year ended
30 June 30 June 31 December
------------------------------------------------
Notes 2008 2007 2007
------------------------------------------------
US$'000 US$'000 US$'000
------------------------------------------------
Non-Current Assets
Property, plant and equipment 6 042 3 061 4 679
Investment property - - 10
Goodwill 4 89 614 31 117 76 515
Other intangible assets 2 829 1 145 1 978
Investments 167 80 101
Deferred income tax asset 1 883 608 1 255
Other non-current assets 428 655 902
Total Non-Current Assets 100 963 36 666 85 440
Current Assets
Inventories 2 108 967 429
Trade and other receivables 73 318 43 144 60 703
Current income tax prepayment 1 813 268 1 735
Investments 1 141 1 327 1 329
Cash and cash equivalents 10 983 19 768 8 313
Total Current Assets 89 363 65 474 72 509
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Total assets 190 326 102 140 157 949
-------------------------------------------------------------------------------------------
Equity
Share capital 5 640 483 534
Retained earnings 2 867 9 708 14 045
Other reserves 76 999 51 319 65 346
Equity attributable to the
Company's equity holders 80 506 61 510 79 925
Minority Interest 3 896 1 575 3 298
Total Equity 84 402 63 085 83 223
Liabilities
Non-Current Liabilities
Borrowings 873 183 180
Deferred income tax liability 1 353 833 1 062
Trade and other payables 27 152 635 20 015
Provisions 420 320 341
Total Non-Current Liabilities 29 798 1 971 21 598
Current Liabilities
Borrowings 17 242 1 101 981
Trade and other payables 51 708 31 711 45 854
Current income tax payable 2 127 976 3 115
Other taxes payable 4 844 3 252 3 042
Other provisions for liabilities
and charges 205 44 136
Total Current Liabilities 76 126 37 084 53 128
Total liabilities 105 924 39 055 74 726
-------------------------------------------------------------------------------------------
Total liabilities and equity 190 326 102 140 157 949
-------------------------------------------------------------------------------------------
International Marketing & Sales Group Plc
Consolidated Cash Flow Statement
Six Months Six months Year ended
30 June 30 June 31 December
-----------------------------------------------
2008 2007 2007
-----------------------------------------------
US$'000 US$'000 US$'000
Cash flow from operating activities
Profit for the period (11 482) 741 6 976
Adjustments for:
Depreciation and impairment of property,
plant and equipment 1 003 770 1 680
Amortisation and impairment of intangible
assets 233 207 382
Impairment of trade and other receivables 59 77 (26)
Impairment of goodwill 5 986 - -
Losses less gains on disposals of property,
plant and equipment - (3) 234
Losses less gains on early redemption of
borrowings 246 - -
Losses less gains on available for sale
investments - (5) -
Revaluation of property, plant and equipment - 1 (16)
Income tax expense 575 353 2 553
Interest income (504) (143) (985)
Interest expense 578 74 433
Share options valuation 55 35 80
Losses less gains on trading investments 494 (411) (411)
Provision for retirement obligations 119 106 77
Discounting loss 977 36 727
Exchange differences 474 41 143
Operating cash flows before working capital
changes (1 187) 1 879 11 847
---------------------------------------------------------------------------------------------
(Increase) in trade and other receivables (41) (5 530) (13 082)
Decrease /(Increase) in inventories (1 325) 33 757
Increase / (decrease) in trade and other
payables 6 689 506 (1 582)
Increase / (decrease) in taxes payable 560 880 (340)
Cash generated (used) in operations 4 696 (2 232) (2 400)
---------------------------------------------------------------------------------------------
Income tax paid (931) (874) (2 571)
Interest received 504 131 985
Interest paid (401) (66) (433)
Net cash generated (used) in operating
activities 3 868 (3 041) (4 419)
---------------------------------------------------------------------------------------------
Cash flows from investing activities
Purchase of property, plant and equipment (889) (469) (1 934)
Proceeds from sale of property, plant and
equipment 207 9 8
Proceeds from sale of available-for-sale
investments - 220 -
Proceeds from sale of investment property - - 215
Acquisition of subsidiaries, net of cash
acquired (11 049) (6 047) (24 725)
Purchase of intangible assets (419) (290) (1 074)
Net cash used in investing activities: (12 150) (6 577) (27 510)
---------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from borrowings 11 156 42 -
Repayment of borrowings (5 789) (200) (1 499)
Proceeds from share issues - 18 320 31 357
Share options execution - 194 194
Purchase of treasury shares - (677) (677)
Issue of ordinary shares - relevant expenses (12) - -
Contribution from minority - - 556
Withholding tax on dividends (132) - (117)
Dividends declared to former shareholders of
subsidiary for pre-acquisition period (188) - -
Dividends paid to the Company's shareholders - - (632)
Dividends paid to minority interests (26) - (1 508)
Net cash provided by financing activities 5 009 17 679 27 674
---------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents (3 273) 8 061 (4 255)
Translation differences - - 773
---------------------------------------------------------------------------------------------
Cash and cash equivalents at the beginning of
the period 8 313 11 918 11 918
Less bank overdrafts (included in current
liabilities - borrowings) (614) (737) (737)
---------------------------------------------------------------------------------------------
Cash and cash equivalents at the end of
period 10 983 19 768 8 313
---------------------------------------------------------------------------------------------
Less bank overdrafts (included in current
liabilities - borrowings) (6 557) (526) (614)
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International Marketing & Sales Group Plc
Consolidated Statement of Changes in Equity
---------------------------------------------------------------------------
Share Other Retained Minority Total Equity
capital reserves earnings Total interests
---------------------------------------------------------------------------
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
----------------------------------------------------------------------------------------------------
As at 01.01.2007 408 33 431 9 076 42 915 2 371 45 286
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Profit for the period - - 644 644 97 741
Currency translation
differences - 79 - 79 - 79
Shares issued 74 18 249 - 18 323 - 18 323
Share options expense - 35 - 35 - 35
Share options exercised 4 190 - 194 - 194
Treasury shares (3) (665) (12) (680) - (680)
Acquisitions in the year - - - - 84 84
Dividends declared - - - - (977) (977)
----------------------------------------------------------------------------------------------------
As at 30.06.2007 483 51 319 9 708 61 510 1 575 63 085
----------------------------------------------------------------------------------------------------
Profit for the period - - 4 967 4 967 1 268 6 235
Currency translation
differences - 87 - 87 308 395
Shares issued 51 13 338 - 13 389 - 13 389
Share options expense - 46 - 46 - 46
Contribution from
minority - 556 - 556 - 556
Treasury shares - - 2 2 - 2
Acquisitions in the year - - - - 539 539
Dividends declared - - (632) (632) (392) (1 024)
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
As at 31.12.2007 534 65 346 14 045 79 925 3 298 83 223
----------------------------------------------------------------------------------------------------
Profit for the period - - (11 604) (11 604) 122 (11 482)
Currency translation
differences - - 716 716 242 958
Shares issued 106 11 598 - 11 704 - 11 704
Share options expense - 55 55 - 55
Withholding tax on
dividends - - (102) (102) (29) (131)
Dividends declared to
former shareholders of
subsidiary for pre-
acquisition period - - (188) (188) - (188)
Acquisitions in the year - - - - 500 500
Dividends declared - - - - (237) (237)
----------------------------------------------------------------------------------------------------
As at 30.06.2008 640 76 999 2 867 80 506 3 896 84 402
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International Marketing & Sales Group Plc
Notes to the interim accounts for the period ended 30 June 2008
Basis of preparation
The condensed Group financial statements for the half-year ended 30 June 2008
included in this report have been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the European Union. The condensed Group
financial statements should be read in conjunction with the annual financial
statements for the year ended 31 December 2007, which were prepared in
accordance with IFRS as adopted by the European Union.
The condensed Group financial statements have been reviewed, not audited, and
were approved by the Board on 12 August 2008. The full year figures for 2007
included in this report do not constitute statutory accounts for the purpose of
Section 104 of the Companies (Jersey) Law 1991. A copy of the Company's
statutory accounts is available on www.imsg.co.uk. The independent auditors'
report on those accounts was unqualified and did not contain any statement under
Section 111(2) or (5) of the Companies (Jersey) Law 1991.
The condensed Group financial statements have been prepared on the basis of the
accounting policies set out in the annual financial statements for the year
ended 31 December 2007.
1. Segment Reporting
The Group is organised into five main business segments comprising, see below.
Segmental information
Analysis by business segments of revenues, gross profit and profit before tax is
given below:
Outsourced Events & Multi Retail
Sales & Trade Consumer Channel Marketing & PR & IR Group
Marketing Marketing Marketing Consutancy
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6m 6m
6m 2008 6m 2007 2008 2007 6m 2008 6m 2007 6m 2008 6m 2007 6m 2008 6m 2007 6m 2008 6m 2007
----------------------------------------------------------------------------------------------
Total sales 20 130 19 743 49 415 30 267 13 139 - 11 440 10 660 6 989 - 101 113 60 670
Inter-segment sales 199 62 - 5 - - 169 214 - 367 281
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Sales to third parties 19 931 19 681 49 415 30 262 13 139 - 11 271 10 446 6 989 - 100746 60 389
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Gross profit 3 357 5 711 12 288 8 266 5 088 - 4 336 4 140 5 616 - 30 685 18 117
----------------------------------------------------------------------------------------------
Overheads and other
results 4 690 5 114 21 596 7 125 4 833 - 4 701 4 783 5 772 - 41 592 17 022
----------------------------------------------------------------------------------------------
Profit / (loss) before
tax (1 333) 597 (9 308) 1 141 255 - (365) (643) (156) - (10907) 1 095
==============================================================================================
A geographical analysis of revenues by destination is given below:
Russia India Turkey Hungary United Kingdom Greece
6m 2008 6m 2007 6m 2008 6m 2007 6m 2008 6m 2007 6m 2008 6m 2007 6m 2008 6m 2007 6m 2008 6m 2007
Turnover by
destination:
Sales to
third
parties 42 993 40 900 3 155 1 874 27 198 10 901 6 851 6 219 2 598 - 4 214 -
-------------------------------------------------------------------------------------------------
Gross profit 10 846 14 357 1 494 956 2 699 1 636 1 693 1 122 1 371 - 3 087 -
-------------------------------------------------------------------------------------------------
Continued
Romania Sweden Rest of the World Group
6m 2008 6m 2007 6m 2008 6m 2007 6m 2008 6m 2007 6m 2008 6m 2007
Turnover by
destination:
Sales to
third
parties 6 338 - 4 805 - 2 594 495 100 746 60 389
-------------------------------------------------------------------------
Gross profit 3 123 - 4 465 - 1 907 46 30 685 18 117
-------------------------------------------------------------------------
2. Tax
The tax charge comprises:
Six Months to Six Months to
30 June 2008 30 June 2007
-----------------------------------
US$'000 US$'000
Current tax:
Corporation tax on profits for the year -
Foreign tax - Russian subsidiaries (24%) 353 342
Foreign tax - Other 735 340
Adjustment in respect of prior years - (12)
Total current tax charge 1 088 670
-------------------------------------------------------------------------------
Deferred tax:
Origination and reversal of timing
differences (513) (316)
Total deferred tax charge (513) (316)
-------------------------------------------------------------------------------
Total tax charge 575 354
-------------------------------------------------------------------------------
3. Earnings per share
The calculation of earnings per share is based on the following profits and
number of shares:
Six Months to 30 June Six Months to 30 June 2007 Year ended 31 December 2007
2008
-----------------------------------------------------------------------------------------------------------------------
Profit Average Profit Average Profit Average
attributable Number Pence attributable Number Pence attributable Number Pence
to equity of per to equity of per to equity of per
holders of shares share holders of shares share holders of shares share
the parent the parent the parent
-----------------------------------------------------------------------------------------------------------------------
US$ '000 '000 US$ '000 '000 US$ '000 '000
-----------------------------------------------------------------------------------------------------------------------
Basic earnings per share (11 604) 47,137 (12.39) 644 36,988 0.87 5 611 40,147 7.00
-----------------------------------------------------------------------------------------------------------------------
Impact of share options 732 0.19 726 (0.02) 705 (0.12)
-----------------------------------------------------------------------------------------------------------------------
Total 47,869 (12.20) 37,714 0.85 40,852 6.88
-----------------------------------------------------------------------------------------------------------------------
4. Goodwill
Movement of goodwill was as follows:
As at As at As at
30 June 30 June 31 December
2008 2007 2007
----------------------------------------------
--------------------------------------------------------------------------------------------
At beginning of period 76 515 23 828 23 828
--------------------------------------------------------------------------------------------
Acquisitions in the period 21 573 7 289 52 687
RPM/ radar impairment loss (5 986) - -
Reduction of RPM/radar deferred purchase
consideration (2 488) - -
--------------------------------------------------------------------------------------------
At end of period 89 614 31 117 76 515
--------------------------------------------------------------------------------------------
Summary of net assets and goodwill arose on acquisitions during the period:
book value at the fair value at the
date of date of
name of subsidiary acquisition acquisition
---------------------------------------------------------------------------------------------
One Media
Net assets acquired:
Tangible fixed assets 611 611
Goodwill 10 733 10 733
Debtors 9 557 9 557
Creditors (5 761) (5 761)
Borrowings (4 589) (4 589)
Cash 168 168
Minority interest (511) (511)
Purchase consideration: 9 859
satisfied by:
Cash paid 413
Shares issued 9 446
Goodwill arising on acquisition (349)
---------------------------------------------------------------------------------------------
Elektrik
Net assets acquired:
Tangible fixed assets 88 88
Debtors 1 099 1 099
Creditors (1 086) (1 086)
Cash 194 194
Purchase consideration: 5 165
satisfied by:
Cash paid 3 049
Cash to be paid 1 870
Shares issued 246
Goodwill arising on acquisition 4 870
---------------------------------------------------------------------------------------------
EY ZHN
Net assets acquired:
Tangible fixed assets 1 765 1 765
Debtors 2 207 2 207
Creditors (1 657) (1 657)
Borrowings (703) (703)
Cash 131 131
Purchase consideration: 5 999
satisfied by:
Cash paid 1 030
Cash to be paid 4 501
Shares issued 468
Goodwill arising on acquisition 4 256
---------------------------------------------------------------------------------------------
5. Share Capital
The number of ordinary shares in issue at 30 June 2008 amounted to 51,080,847.
During the course of the period the company issued 6,815,781 new EUR 0.01
ordinary shares for prices that vary from GBP 0.75 to 1.49 per share. .
6. Commitments
The Group has entered into commitments related to the purchase of the remaining
minority interests of a number of subsidiaries undertakings. The Company
committed to pay US$3,417 thousand and issue ordinary shares for US$189 thousand
in 2010 for Candid Marketing, US$1,583 thousand and issue ordinary shares for
US$528 thousand in 2009 for HPS, US$107 thousand and issue ordinary shares for
US$85 thousand in 2010 for MAPP and Promer, US$2,744 thousand and issue ordinary
shares for US$ 305 thousand in 2012 for Friends, US$2,613 thousand and issue
ordinary shares for US$1,407 thousand in 2010 for Zap Medya.
Independent Review Report to International Marketing & Sales Group Plc
Introduction
We have been engaged by the company to review the condensed set of consolidated
financial statements in the half-yearly financial report for the six months
ended 30 June 2008 which comprises the consolidated income statement,
consolidated balance sheet, consolidated statement of changes in equity,
consolidated cash flow statement and the related notes. We have read the other
information contained in the half-yearly financial report and considered whether
it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company in accordance with our terms of
engagement. Our review has been undertaken so that we might state to the company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the requirements of the AIM Rules.
As disclosed the annual financial statements of the group are prepared in
accordance with IFRSs as adopted by the European Union. The condensed set of
financial statements included in this half-yearly financial report has been
prepared in accordance with accounting policies which are based on the
recognition and measurement principles of IFRS as adopted by the European Union
expected to be effective and adopted at 30 June 2008.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information
Performed by the Independent Auditor of the Entity'' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2008 is not prepared, in all material
respects, in accordance with IFRS as adopted by the European Union and the AIM
Rules.
St. Paul's House, MOORE STEPHENS LLP
Warwick Lane, London Registered Auditor
EC4M 7BP Chartered Accountants
27 August 2008
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