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
IR SEEFMSFWSEIU
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