Interim Results

RNS Number : 8515L

TLA Worldwide PLC

10 September 2012

 



TLA Worldwide plc ("TLA", "Group" or "the Company")

Interim Results for the six months ended 30 June 2012

TLA Worldwide (AIM:TLA), the athlete representation and sports marketing business, is pleased to announce its interim results for the six months ended 30 June 2012.

Financial highlights

·    Adjusted EBITDA¹of $3.5million (£2.2 million)2, EBITDA of $3.3m (£2.1 million)2

·    Cash balance at 30 June 2012 of $2.4 million ($3.1 million at 31 December 2011)

·    Contracted revenue of $32 million at 31 July 2012

·    93% of full year market revenue expectations contracted

·    Adjusted operating margin of 46%¹

·    Diluted earnings per share of 0.37 cents (0.24p)2

·    Adjusted diluted earnings per share3 of 2.5 cents (1.6p)2

·    Statutory operating profit of $1.2 million (£0.8 million)2 and profit before tax of $0.7 million  (£0.4 million)2

Operational highlights

·    Integration materially complete, one platform under one brand

·    Over 40 new client wins year to date with no losses

·    18 players represented in the Major League Baseball ("MLB") Draft with five in the first rounds

·    Four clients in MLB All-Star game, making 17 current or past All Stars represented in total

·    PGA TOUR client roster increased by 30%

Bart Campbell, Chairman, commented:

"I am extremely pleased with TLA's progress to the half year.  Client wins and contracted revenue at 93% of 2012 revenue expectations highlight the momentum in the business. The growing sports and media landscape, notably in Major League Baseball, position us well for future success. The sports marketing division is traditionally second half weighted. While we are mindful that this period is critical for our success, we are encouraged by current activity levels.  The board remain confident that the Group is trading in line with full year expectations."

_______________
1 Adjusted EBITDA is defined as operating profit adjusted to add back depreciation, amortisation of acquired intangible assets and any other acquisition related charges, share based payment charges fair value movement on financial derivatives and exceptional items. Adjusted operating margin is calculated by dividing Adjusted EBITDA by revenue and expressing as a percentage.

2 Balances in pounds sterling are included solely for convenience and stated, as a matter of arithmetical computation only, on the basis of all balances being translated from US Dollars into pounds Sterling at the rate prevailing on 30 June 2012 of USD1.5615:£1.00. This translation should not be construed as meaning that the US Dollar amounts actually represent, have been, or could be converted into the stated number of pounds Sterling.

3 Adjusted earnings per share is defined as adjusted earnings for the period divided by the weighted average number of ordinary shares in issue during the period. Adjusted earnings for the period is defined in note 3 to the interim financial statements.

Contacts

TLA Worldwide
Mike Principe (CEO) Bart Campbell (Chairman)	[phone] [phone]
Pelham Bell Pottinger
Dan de Belder/ Anna Gamble	[phone]
Cenkos Securities
Ivonne Cantu (Nomad)
Julian Morse	[phone]

Chairman's Statement

On 8 December 2011, TLA Worldwide plc ("TLA" or "the Group") completed the acquisition of the trade and certain assets of two agencies, being LS Legacy Sports Group LLC ("Legacy"), a pre-eminent baseball athlete management business and the Agency Group ("Agency"), a leading independent sports marketing agency, successfully listing the combined entity on the Alternative Investment Market ("AIM"). It is with great pleasure that I announce our first interim results, highlighting strong trading in the six months to 30 June 2012. It has been a period of both operational and financial success and one that the team and I are proud of.

Review of Results

For the period ended 30 June 2012, the Group reported an Adjusted EBITDA (comprehensive definition in Business Review) of $3.5 million. EBITDA was $3.3 million and statutory operating profit was $1.2m for the same time period. These results represent a strong period of trading in line with the expectations set at the time of the IPO. We have reached approximately 50% of the market forecasts for EBITDA for the full year in the six months to June with contracted revenues to be delivered in the year currently standing at 93% of our 2012 market forecasts. Trading within both the baseball and the sports marketing businesses has been encouraging with full detail set out in the Business Review.

The cash position shown at the half year has been maintained through August 2012 after the payment of the group's first half tax liability. To date we have repaid $1 million of the debt principal and requisite interest. Cash collection due to the dynamics of the baseball business will always be second half weighted. We are pleased with collections thus far, anticipating a strong fourth quarter and a year end cash balance in line with expectations.

Review of Operations

The operational integration of the two acquired businesses gathered pace into the first half of our financial year, building on the initial good work in the period since acquisition. The newly consolidated "TLA" brand launched in February 2012 and has gathered momentum since. The Group has added over 40 new clients post IPO with no losses demonstrating continued high service levels through a period of transition.

This is an extremely exciting time to be involved in sports marketing and especially the business of baseball. Favourable market trends, especially in the US sports media landscape, provide impetus to the Group's quest for growth. US television and media rights fees continue to increase with respective Major League Baseball ("MLB") revenues projected to experience strong growth at both the local and national levels (Sources: Forbes, ESPN). This has been amply demonstrated by the recent ESPN broadcast deal that doubled its yearly baseball spend from 2014. Concurrently, Fitch Ratings announced in May that it increased Major League Baseball's credit rating to 'A-', across its various debt facilities, highlighting MLB's economic health. Fitch cited, amongst its reasons for the improved rating, solid underlying league economics, league oversight, good governance and the long history of rising television contracts.

We believe baseball will continue to grow in line with its historical ten year CAGR of more than 9%, adding to an industry already worth more than $7 billion per annum, twice the size of Premier League Football in the UK. With the lowest player salary to industry revenue ratio in major league sports any increased uplift will lead to more than proportionate salary rises and fees for our business. On-going labour peace for another five years as a guaranteed minimum following the new collective bargaining agreement signed in November 2011 underpins this view and mitigates our largest risk.

Board Changes

As reported in our 2011 year end accounts of 14 March 2012, Peter Moore resigned as a non-executive director due to his commitments in his new role as COO of Electronic Arts.  Peter provided invaluable assistance through the Initial Public Offering process and remains an advisor to the Group.  Andrew Wilson replaced Peter as a non-executive director and has brought both insight and strategic assistance through his experience in both sports businesses and the public markets. On 15 June 2012, the Board was strengthened with the appointment of Andy Pearson. Andy offers added experience to the Board through his 16 years at KPMG where he was a senior partner working on over 100 mergers and acquisitions.

Outlook

I am extremely pleased with TLA's progress to the half year.  Client wins and contracted revenue at 93% of 2012 revenue expectations highlight the momentum in the business. The growing sports and media landscape, notably in MLB, position us well for future success. The sports marketing division is traditionally second half weighted. While we are mindful that this period is critical for our success, we are encouraged by current activity levels.  The board remain confident that the Group is trading in line with full year expectations.

Bart Campbell

Chairman

10 September 2012

Business Review

This review covers the six month trading period to 30 June 2012 following the acquisitions of Agency and Legacy. For this period, the Group reported an operating profit of $1.2 million. The performance at the operating level, before finance costs, tax, depreciation, amortisation and exceptional charges showed an Adjusted EBITDA of $3.5 million.

TLA segments its operations into baseball representation and sports marketing as follows:

Six month period to June 2012	Baseball Representation $000's	Sports Marketing $000's	Corporate $000's	Total $000's
Revenues	5,241	2,404	-	7,645
Cost of sales	(169)	(106)	-	(275)
Gross profit	5,072	2,298	-	7,370
Operating expenses excl. depreciation, amortization and exceptional items	(2,034)	(1,123)	(704)	(3,861)
Adjusted EBITDA1	3,038	1,175	(704)	3,509
Depreciation	(2)	-	(1)	(3)
Amortisation of intangibles arising on acquisition	(1,459)	(653)	-	(2,112)
Exceptional items (see Note 3)	(21)	(36)	(110)	(167)
Operating profit	1,556	486	(815)	1,227
Finance costs				(532)
Profit before tax				695
Taxation				(278)
Profit for the period				417

(1)  Adjusted EBITDA is defined as operating profit adjusted to add back depreciation of property, plant and equipment, amortisation of acquired intangible assets and any other acquisition related charges, share based payment charges and exceptional items.  Exceptional items are those items believed to be exceptional in nature by virtue of their size and or incidence, and in the current period comprise costs associated with the integration of the acquisitions, set up of the group platform, relocation costs and those classified as out with the normal running of the underlying businesses. There have been no share based payment charges in the period although the Directors believe that such items may arise in the future.

Given this is the first six months of full trading since the acquisition we are encouraged by the activity levels and pleased with the underlying performance of both businesses. The initial phase of the integration of the two agencies is materially complete.  Earlier in the period we also launched the new brand and company website. Importantly, the Group has added over 40 clients to its roster since IPO.

Baseball Representation

The baseball division has performed strongly in the first half with excellent visibility underpinning our forecasts.

Operational highlights

·   MLB Draft -TLA's baseball division advised 18 players in the Draft, the process by which amateur players are chosen to play professional baseball. This represented a strong performance for the Group, up by four players on the previous year. Five players were drafted in the first or supplemental rounds with TLA representing the fourth overall pick. This process has a financial impact within the year as we are able to earn a fee on their respective signing bonuses. Performance for the Draft has been in line with expectations.

·   All-Star mid-season break - Four of TLA's current MLB clients were selected for the MLB All-Star Game. All-Stars are chosen by the fans, their peers, managers and coaches. Selection demonstrates their standing within the league and strengthens their positioning for both on and off field contracts. The Group has now represented 17 current and past All-Stars.

·   Minor League Clients - Seven of TLA's minor league baseball clients have been called up to MLB rosters within the period, a significant increase from the corresponding prior period. This marks the beginning of their MLB service time, bringing them closer to a lucrative contract and subsequent fees for the business. In addition, sixteen of TLA's minor league clients were selected for their respective All-Star and Futures games that represent the top talent in their leagues. This is up from nine in the previous year.

·   Roster Strength - In the period, TLA's baseball division has increased its client base by over 20% and its MLB roster representation by 30%. Such activity brings a significant proportion of the roster closer to the fee paying stage of their careers, in addition to underpinning revenue through increasing the greater pool of potential fee paying players.

Financial highlights

The period analysed above captures half of the baseball season which runs from April through to early October and includes the majority of the revenues generated from the 2012 Draft which occurred in late June as highlighted within the operations section.

As mentioned in the Chairman's statement, the underlying economics of baseball are extremely stable and are poised to enter a period of growth through the sustained popularity of the game, underpinned by long term lucrative media deals. As these fuel revenue generation for the MLB clubs, players and subsequently our business should benefit accordingly.

Revenue of $5.2 million generated an Adjusted EBITDA of $3.0 million and a statutory operating profit of $1.6 million. Second half activity is underpinned by the business being 98% contracted through 2012 in relation to market forecasts.

Sports Marketing

Trading within the sports marketing division has been buoyant across all four of its markets. Momentum has continued into the second half with activity levels and increased recruitment giving us encouragement as we move into its most lucrative months from September to November.

Operational highlights

·   Golf - TLA's golf clients have registered twenty-five top 10 finishes on the PGA TOUR, including two in the majors. Of its PGA TOUR clients, six are in the top 50 of the FedEx rankings. Our Nationwide Tour clients have recorded fifteen top 10 finishes which should lead to more players within the roster on the PGA TOUR for next year. In addition, recruitment has been particularly strong thus far with three new PGA TOUR members signing including John Huh, 21 (favourite to be Rookie of the Year) and Jeff Overton, 29 (Ryder Cup player in 2010). Performance on all fronts feeds the pipeline underpinning future and current year performance.

·     Talent Marketing - The six months to June 2012 have been a busy period for the Group. Sixty appearances at the time of the Super Bowl in February gave us a good start to the year creating momentum that has continued. We have an exclusive representation agreement with Ryan Tannehill, the 8th pick in the NFL Draft and now starting quarterback for the Miami Dolphins this coming season. Our three Track and Field Olympians Lolo Jones, Trey Hardee and Wallace Spearman all made their respective finals with Trey taking the silver medal in the decathlon. Despite Lolo's fourth place finish, pre-Olympic media, public and corporate interest levels have been maintained.

·     Consultancy - The first half has seen the expansion of our corporate consultancy practice. We currently have three significant clients, building a healthy book of business where monthly retainers are levied.

·   Coaching and Broadcasting - Within the coaching and broadcasting divisions the principals continue to recruit new talent. Whilst this uplift may not be felt in 2012, medium term prospects remain bullish. Twelve clients have been signed since the beginning of the year. As we grow our coaching and broadcasting division visibility is enhanced due to the long term nature of client contracts, in turn increasing our quality of earnings.

Financial highlights

The six month period to June was in line with expectations with encouraging momentum created by the Super Bowl and sustained through the half. This has continued with client success across the board moving into the second half and our most lucrative months between September and November. The principals of the business have started to monetise the larger roster and we look forward to a successful second half.

Sports marketing on a global scale is forecast to grow at over 5% per annum proving to be a resilient sector even in the current economic conditions. As conditions improve we are well positioned to capitalise.

Revenue of $2.4 million generated an Adjusted EBITDA of $1.2 million and a statutory operating profit of $0.5 million. Contracted revenues through 2012 currently stand at 85% of market expectations.

Liquidity

The Group had $2.4m of cash as at 30 June 2012 and has paid off $1 million of its five year term loan in the period. Gross debt currently stands at $9 million.

We expect cash flows to be second half weighted following the revenue pattern in the sports marketing division and also due to the majority of baseball collections occurring after the season in the fourth quarter. Current projections give us comfort that our cash reserves at year end will be in line with expectations, at a suitable level to cover all working capital and earn-out requirements.

Key Performance Indicators ("KPIs")

The Group manages its operational performance using a number of KPIs.  The most important of these are:

^     Adjusted EBITDA

^     Operating margin

^     Profit before tax

^     Contracted revenue ($29m at December 2011, $32m at July 2012)

^     Number of new client wins

^     Debtor collection days

As this is our first relevant trading period, we will continue to monitor the above metrics against performance. Currently we are happy with how the business is performing against the above metrics and look forward to revisiting these in the near future.

Corporate Development

As set out in the Chairman's statement, the Group continues to look for strategic acquisitions as well as to develop organically by expanding the current service offering and geographic presence.

It is TLA's focus to become the pre-eminent, fully integrated representation and marketing services agency with a focus on professional baseball.  As a combined Group, TLA combines industry-leading capabilities in baseball with expertise in broadcasting, coaching, golf and talent management as well as corporate consulting. TLA's stronger platform is facilitating the recruitment of new clients and enabling the business to identify new opportunities across the portfolio.  We plan to continue our organic growth, augmenting that work with accretive acquisitions or other combinations as well as the development of selective properties for which we have identified a need in the marketplace.

Dividend Policy

The Directors intend to pay dividends at such time that it is commercially prudent to do so.  It is the Board's intention to seek to pay a dividend with respect to the full year 2012 results.

Michael J. Principe

Chief Executive

10 September 2012 

Group Income statement

For the six month period to 30 June 2011

	Note	6m period to 30 June 2012 $000's	23 days to 31 December 2011 $000's
Revenue	1	7,645	175
Cost of sales		(275)	(4)
Gross profit		7,370	171
Administrative expenses		(6,143)	(3,273)
Operating profit / (loss) from operations		1,227	(3,102)
Operating profit / (loss) before exceptional costs		1,394	(808)
Exceptional Items	3	(167)	(2,294)
Operating profit / (loss) from operations		1,227	(3,102)
Finance costs		(532)	(119)
Profit / (loss) before taxation		695	(3,221)
Taxation	4	(278)	537
Profit / (loss) for the period from continuing operations attributable to the equity holders in the Company		417	(2,684)

Profit/ per share from continuing operations (note 2)

Basic (cents)		0.42	(2.72)
Diluted (cents)		0.37	(2.72)

Group Statement of Comprehensive Income

For the six month period to 30 June 2012

	6m period to 30 June 2012 $000's	23 days to 31 December 2011 $000's
Profit/(loss) before taxation	417	(2,684)
Exchange differences on translation of overseas operations	4	174
Profit/(loss) for the period attributable to the equity holders in the Company	421	(2,510)

Group Balance Sheet

As at 30 June 2012

						Note		30 June 2012 $000's	(Restated - Note 5) 31 December 2011 $000's
Non-current assets
Intangible assets - goodwill						5		24,613	24,613
Other intangible assets								20,548	22,661
Property, plant and equipment								32	4
Deferred tax asset								808	602
								46,001	47,880
Current assets
Trade and other receivables								4,765	3,818
Cash and cash equivalents								2,407	3,115
								7,172	6,933
Total assets								53,173	54,813
Current liabilities
Trade and other payables								(2,414)	(3,447)
Borrowings						6		(1,907)	(1,907)
Deferred consideration						7		(3,840)	-
								(8,161)	(5,354)
Net current assets								(989)	1,579
Non-current liabilities
Borrowings						6		(6,672)	(7,626)
Deferred consideration						7		(11,138)	(15,094)
Financial liability								(120)	(78)
Other payables								(8)	(8)
								(17,938)	(22,806)
Total liabilities								(26,099)	(28,160)
Net assets								27,074	26,653
Equity
Share capital								1,985	1,985
Share premium								16,262	16,262
Shares to be issued								10,916	10,916
Foreign currency reserve								178	174
Retained loss								(2,267)	(2,684)
Total equity								27,074	26,653

Group Statement of Cash Flows

For the six month period to 30 June 2012

	Note	6m period to 30 June 2012 $000's	23 days to 31 December 2011 $000's
Net cash from operating activities	8	878	315
Investing activities
Purchases of property, plant and equipment		(30)	(4)
Acquisition of subsidiary undertakings		-	(24,522)
Net cash used in investing activities		(30)	(24,526)
Financing activities
Interest paid		(256)	(32)
New bank loans raised	6	-	10,000
Bank loans repaid	6	(1,000)
Fees paid on issue of new bank loans		-	(476)
Payment of deferred consideration		(303)
Issue of shares for cash consideration		-	17,834
Net cash (outflow)/inflow from financing activities		(1,559)	27,326
Net increase in cash and cash equivalents		(711)	3115
Cash and cash equivalents at beginning of period		3,115	-
Foreign currency translation effect		3	-
Cash and cash equivalents at end of period		2,407	3,115

Group Statement of Changes in Equity

For the six month period to 30 June 2012

	Share Capital $000s	Share Premium $000's	Shares to be issued $000s	Foreign Currency Reserve $000s	Retained Earnings $000s	Total $000s
Balance at 16 August 2011	-	-	-	-	-	-
Total comprehensive income for period	-	-	-	174	(2,684)	(2,510)
Equity issued during the period	1,985	17,095	-	-	-	19,080
Equity costs charged during the period	-	(833)	-	-	-	(833)
Deferred consideration to be settled in equity	-	-	10,916	-	-	10,916
Balance at 31 December 2011 (Restated)	1,985	16,262	10,916	174	(2,684)	26,653
Total comprehensive income for period	-	-	-	4	417	421
Balance at 30 June 2012	1,985	16,262	10,916	178	(2,267)	27,074

Notes to the preliminary announcement of results

General information

TLA Wolrdwide plc (the "Company") is incorporated and domiciled in the United Kingdom.  The Company is listed on the AIM market of the London Stock Exchange. The registered address is Southside, 6 Floor,105 Victoria Street, London SW1E 6QT.

Basis of preparation

The condensed set of financial statements has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements. While the financial figures included in this half-yearly report have been computed in accordance with IFRSs applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.

Going concern

After making due enquiries, and in accordance with the FRC's "Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009", the Directors view is that the Group has adequate resources to continue in operational existence for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing these condensed consolidated half year financial statements.

1.  Segmental Analysis

The Group reports its business activities in two areas: Baseball Representation and Sports Marketing.  Corporate represents the Group's costs as a public company. The Group derives its revenues in the United States of America.

Baseball Representation - primarily looks after the on field activities of baseball players, including all aspects of a player's contract negotiation lists.

Sports Marketing - primarily looks after the off-field actives of athletes; in addition it represents broadcasters and coaches in respect of their contract negotiations.

IFRS 8 paragraph 34 requires disclosure of revenues by customer for each customer that generates in excess of 10 per cent of the Group's total revenues in a period. In the six month period ended 30 June 2012, no client generated in excess of 10 percent of total revenue.

1.         Segmental Analysis (continued)

Six months to 30 June 2012	Baseball Representation $000's	Sports Marketing $000's	Corporate $000's	Total $000's
Revenues	5,241	2,404	-	7,645
Cost of sales	(169)	(106)	-	(275)
Gross profit	5,072	2,298	-	7,370
Operating expenses excl. depreciation, amortisation and exceptional items	(2,034)	(1,123)	(704)	(3,861)
Operating profit before depreciation, amortisation and exceptional items	3,038	1,175	(704)	3,509
Depreciation	(2)	-	(1)	(3)
Amortisation of intangibles arising on acquisition	(1,459)	(653)	-	(2,112)
Exceptional items (note 3)	(21)	(36)	(110)	(167)
Operating profit	1,556	486	(815)	1,227
Finance costs				(532)
Profit before tax				695
Taxation				(278)
Profit for the period				417

Assets		37,697		14,101		1,375			53,173
Liabilities		(1,257)		(860)		(23,982)			(26,099)
Capital Employed		36,440		13,241		(22,607)			27,074
23 days to 31 December 2011		Baseball Representation $000's		Sports Marketing $000's			Corporate $000's		Total $000's
Revenues		19		156			-		175
Cost of sales		-		(4)			-		(4)
Gross profit		19		152			-		171
Operating expenses excl. depreciation, amortisation and exceptional items		(289)		(155)			(242)		(686)
Operating profit before depreciation amortisation and exceptional items		(270)		(3)			(242)		515
Amortisation of intangibles arising on acquisition		(192)		(101)			-		(293)
Exceptional items (note 3)		-		-			(2,294)		(2,294)
Operating profit		(462)		(104)			(2,536)		(3,102)
Finance costs									(119)
Profit before tax									(3,221)
Taxation									537
Profit for the period									(2,684)

Assets	37,640	13,976	3,197	54,813
Liabilities	(1,257)	(278)	(26,625)	(28,160)
Capital Employed	36,383	13,698	(23,428)	26,653

2.         Earnings per share

	6m period to 30 June 2012 cents per share	23 days to 31 December 2011 cents per share
Basic earnings (loss) per share	0.42	(2.72)
Diluted earnings (loss) per share	0.37	(2.72)

The calculation of earnings per share per share is based on the following data:

	6m period to 30 June 2012 $000's	23 days to 31 December 2011 $000's
Profit/(Loss) for the purposes of basic earnings per share being net loss attributable to owners of the Company	417	(2,684)
Number of Shares
Weighted Average number of shares in issue:	63,860,990	63,860,990
Deferred consideration shares to be issued	34,802,015	34,802,015
Weighted average number of shares for the purposes of basic earnings (loss) per share	98,663,005	98,663,005
Dilutive effect of shares to be issued as cash or equity	12,593,524	-
Weighted average number of shares for the purposes of diluted earnings (loss) per share	111,256,529	98,663,005

Since the group reported a net loss for the 23 day period to December 2011, diluted loss per share is equal to loss per share. Hence the calculation of diluted loss per share does not include deferred consideration payable in shares or cash. As the group is now profitable this has been taken into account in the above calculation. Details of deferred consideration are given in note 7.

Adjusted earnings per share (see below):

	6m period to 30 June 2012 cents per share	23 days to 31 December 2011 cents per share
Basic adjusted earnings per share	2.80	0.03
Diluted adjusted earnings per share	2.48	0.03

Adjusted loss for the period is defined as loss for the period adjusted to add back amortisation of acquired intangible assets and any other acquisition related charges, share based payment charges, fair value movement on financial derivatives and shares to be taken in cash or equity, unwinding of discount of deferred consideration and exceptional items.  The adjusted profit attributable to owners of the Company used in calculating the basic and diluted adjusted earnings per share is reconciled below:

2.         Earnings per share (cont.)

	6m period to 30 June 2012 $000's	23 days to 31 December 2011 $000's
Profit attributable to shareholders	417	(2,644)
Adjusted for
Exceptional costs	167	2,294
Amortisation of acquired intangible assets	2,112	293
Debt cost amortisation	46	-
Fair value loss on interest rate swap	42	78
Fair value adjustment for shares to be taken in cash or equity	55	-
Unwinding of discount to deferred consideration	132
Deferred tax movement	(206)	-
Adjusted profit attributable to shareholders	2,765	21

3.         Exceptional items

Exceptional items relate to acquisition and integration costs.  In the period to 30 June 2012 these relate primarily to one-off costs incurred in integrating the businesses of Legacy and Agency.

4.         Taxation Expenses

	6m period to 30 June 2012 $000's	23 days to 31 December 2011 $000's
UK Taxes
Current year	-	-
Overseas Taxes
US State and Federal taxes	(484)	(65)
Deferred tax	206	605
	(278)	537

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

5.         Goodwill

	6m period to 30 June 2012 $000's	23 days to 31 December 2011 $000's *As restated
Cost
At 1 January 2012 (as previously stated)	24,613	24,055
Restated	-	558
At 1 January (as restated)	24,613	24,613

*The restatement of goodwill relates to the reassessment of fair value of net assets, and purchase consideration on the acquisition of Legacy and Agency in the prior period.

6.         Borrowings

	6m period to 30 June 2012 $000's	23 days to 31 December 2011 $000's
Secured borrowing at amortised cost
Bank loans	9,000	10,000
Debt costs amortised over the life of the facility	(421)	(467)
	8,579	9,533
Total borrowings
Amount due for settlement within 12 months	1,907	1907
Amount due for settlement after 12 months	6,672	7,626
	8,579	9,533

All borrowings are denominated in US dollars.   The other principal features of the Group's borrowings are as follows.

·        Interest is charged at 4% above US LIBOR

·        Repayments are made quarterly evenly over the life of the loan;

·        The loan is for 5 years and expires on 8 December 2016.

·        Interest rate hedged at 5.22%

7.         Deferred Consideration

     Under the terms of the acquisition agreements referred to in note 2 the Company has obligations to the vendors of those business as set out below:

	6m period to 30 June 2012 $000's	(Restated) 23 days to 31 December 2011 $000's
Payable in less than one year
- Settled by way of cash consideration	3,840	303
Payable in one to two years
- Settled by way of cash or issue of shares	6,956	4,271
Payable in two to five years
- Settled by way of cash consideration	5,790	10,660
Payable in more than five years
- Settled by way of cash consideration	-	1,600
Impact of discounting on provisions payable in cash at the borrowing rate of 5.22%	(1,608)	(1,740)
Total deferred consideration payable	14,978	15,094

In addition to the liabilities detailed above an additional $10,916,000 consideration payable in one to two years is to be settled by way of the issue of shares. This liabilty is not contingent on any future event and is therefore considered an equity item.

8.         Notes to the Statement of Cash Flow

	6m period to 30 June 2012 $000's	(Restated) 23 days to 31 December 2011 $000's
Operating profit for the period	1,227	(3,102)
Adjustments for:
Amortisation of intangible assets	2,112	293
Exceptional costs paid in shares	-	1,246
Operating cash flows before movements in working capital	3,339	(1,563)
Increase in trade receivables	(947)	(496)
(Decrease)/Increase in trade payables	(1,459)	2,203
Cash generated by operations	933	144
Income taxes paid	(59)	(3)
Foreign exchange gains and loses	4	174
Net cash from operating activities	878	315

Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less. The carrying amount of these assets is approximately equal to their fair value.

 

END

 

 

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