Final Results

11th Mar 2009 07:00



CHIME COMMUNICATIONS PLC

AUDITED PRELIMINARY RESULTS FOR

THE YEAR ENDED 31ST DECEMBER 2008

Chime Communications PLC, the leading marketing services group, today announces its preliminary results for the year ended 31 December 2008.

Highlights

Operating income up 16% to £112.1 million (2007: £96.5 million)

- Organic growth of 9%

Operating profit up 15% to £18.1 million (2007: £15.7 million)

- Organic growth of 10%

Margin of 16.2% (2007: 16.3%) 

Profit before tax up 19% to £16.3 million (2007: £13.8 million)

Earnings per share from continuing operations up 16% to 19.87p (2007: 17.15p)

Final dividend of 3.18p per share (2007 - 2.40p). Total for 2008 of 4.72p per share (2007: 3.50p), an increase of 35%

Net cash at 31st December 2008 of £6.3 million (2007: £0.8 million).

Note: Organic growth is calculated excluding all acquisitions in 2007 and 2008

Lord Bell, Chairman of Chime Communications, said : 

 "2008 has been a very successful year of double digit growth, although the outlook for 2009 is uncertain. So far the impact on businesses affected by the economic downturn has been offset by growth in other businesses."

For further information please contact:

Lord Bell, Chairman 020 7861 8515

Chime Communications

Christopher Satterthwaite, Chief Executive 020 7861 8515

Chime Communications

Mike Davies/Helen Tarbet 020 7861 3232

Bell Pottinger Corporate & Financial

 

SUMMARY OF RESULTS

Actual	2008 £m	2007 £m	% Change
Operating Income	112.1	96.5	+16%
Operating Profit	18.1	15.7	+15%
Operating Profit Margin	16.2%	16.3%
Organic (1)
Operating Income	94.7	86.6	+9%
Operating Profit	15.3	13.8	+10%

(1) Excluding acquisitions in 2007 and 2008

REVIEW OF OPERATIONS

 

Overall the Group has continued to perform well. The Group acted for 1,381 clients in 2008 compared to 1,379 in 2007. 256 of these clients used more than one of our businesses (236 in 2007) which represented 66% of total operating income (2007 - 62%).

170 clients paid us over £100,000 in 2008, compared to 164 in 2007. Our top 30 clients represented 48% of total operating income (2007 - 45%).

Our two largest clients represented 18.4% of our operating income. Both clients have been retained since 2003, are high margin and have normal renewal terms. No other client represented more than 3% of our operating income. 

Average fee income per client in 2008 was £81,000 compared to £70,000 in 2007. Average income per employee was £111,000 in 2008 compared to £105,000 in 2007. In 2008, 37% of our income came from overseas work compared to 34% in 2007.

Bell Pottinger retained its position as No. 1 in the "PR Week" League Table, Fast Track remains No. 1 in the "Marketing" Sponsorship League Table and VCCP won the Marketing Week Effectiveness Award for the launch of the O2 arena. 

Divisional Performance

Trading conditions deteriorated in the second half of 2008 for some of our businesses whilst others performed ahead of our expectations. The Public Relations Division was ahead of budget for 2008, whilst the Advertising and Marketing Services and Research Divisions were behind budget.

Public Relations continues to be our largest division being 55% of operating income (2007 - 56%), Advertising and Marketing Services was 39% (2007 - 36%) and Research 6% (2007 - 8%).

Public Relations - Bell Pottinger Group including Good Relations, Harvard and Insight

	2008 £m	2007 £m	% Change
Operating Income	61.3	54.1	+13%
Operating Profit	12.1	9.3	+30%
Operating Profit Margin	19.7%	17.3%

The Public Relations Division had an extremely good year with a particularly strong second half. Costs were very carefully controlled and the 13% increase in operating income has therefore resulted in a 30% increase in operating profit. Our geopolitical, brand, technology and Middle East businesses all performed ahead of our expectations.

Advertising and Marketing Services - VCCP Group, Fast Track and Teamspirit

	2008 £m	2007 £m	% Change
Operating Income	43.8	34.7	+26%
Operating Profit	6.2	5.6	+11%
Operating Profit Margin	14.1%	16.0%

Our Advertising and Marketing Services Division had a flat year with the first half better than the second half. Our sports marketing, direct marketing, digital, search and brand identity businesses all performed ahead of 2007.

Research - The Research Group

	2008 £m	2007 £m	%  Change
Operating Income	7.0	7.7	-10%
Operating Profit	0.4	1.4	-73%
Operating Profit Margin	5.4%	18.1%

The Research Division was budgeted to improve in the second half of 2008 following the restructuring we did in the first half. However, due to postponed and cancelled projects their performance continued to deteriorate. We still have confidence in the restructuring we have done and the first quarter of 2009 is looking encouraging with a healthy new business pipeline. In addition the launch of Caucus World, our new digital platform, was delayed due to hold ups in software development.

HIGH PROFILE ACTIVITIES

Representing Rupiah Banda in the Zambian Presidential Election; he won

Mubadala's sponsorship of Ferrari

The Lysander Gatwick Investment Group bid for London Gatwick Airport

The Food Standards Agency advertising campaign for saturated fats

Emirates Sponsorship of the Rugby Sevens World Cup

The new advertising campaign for "Compare the market.com"

The launch of the Department of Health new Hepatitis C awareness campaign

The launch of the report on the future of the luxury industry commissioned by De Beers

BT's sponsorship of the Paralympic World Cup

The study into the Future of Financial Advice and Distribution on behalf of Aegon

Entry in to service of the largest fleet of the worlds biggest aircraft - the Airbus A380 superjumbo for Emirates Airline.

NEW BUSINESS WINS

New business wins in 2008 included:

Aunt Bessie's	Morrisons
Barclays Wealth	Motor Sports Association
Bell Pottinger appointed to COI roster	MTV
Big Lottery Fund	Natural History Museum
BP (London 2012 strategy)	Ofcom
BPP Business School	QVC
Cheapflights.com	RSA
Compass Group	Sage
Department for Children, Schools and Families	School Food Trust
Farnborough Airport	Sony Pictures Home Entertainment
Football Association	Standard Life
G4S	The New Football Pools
Hiscox Kellogg's	The Economic Development Board  of Bahrain
Ladbrokes	The Government of Belarus
Madrid 2016

CASH FLOW, BANKING ARRANGEMENTS AND DEFERRED CONSIDERATIONS

Net cash at 31st December 2008 was £6.3 million compared to £0.8 million at 31st December 2007.

The Group benefited from unusually strong cash generation close to the year end and if this had not occurred the Group would have had approximately £3 million of debt at 31st December 2008.

The Group generated cash from trading activities in 2008 of £24.6 million (2007 - £21.4 million) representing a cash conversion on profits before tax of 151% (2007 - 155%).

The Group continues to operate well within its banking covenants and has a borrowing facility of £32 million which continues until July 2013.

Deferred considerations still payable total a maximum of £35.7 million, comprising £18.7 million payable in cash and £17.0 million payable in shares or cash at Chime's discretion. The timing of these payments is £0.2 million in 2009, £9.8 million in 2010 with the balance payable between 2011 and 2014.

TAXATION

The effective tax charge for 2008 was 31.6% compared to 32.4% last year. The notional finance costs of deferred considerations which are not subject to tax relief and deferred tax charges relating to share option schemes increased the effective tax charge above the UK corporation tax rate of 28%.

 

DIVIDENDS

The dividend has increased in line with the adoption of a more progressive dividend policy announced this time last year. The Group now operates a 4 times cover policy.

The Board is proposing to pay a final dividend of 3.18p per share (2007 - 2.40p), giving a total dividend per share of 4.72p compared to 3.50p in 2007, this is an increase of 35%. The final dividend will be payable on 19th June 2009 to shareholders on the register at 29th May 2009. The expected ex-dividend date is 27th May 2009.

CORPORATE AND SOCIAL RESPONSIBILITY

The Group continues to be carbon neutral and has targeted to reduce its carbon emissions by a further 5% in 2008 (2007 - 37%). The Group received a "Big Tick" award from Business in the Community for its work on addressing climate change.

BOARD CHANGES

On 2nd July 2008 The Hon Richard Alston joined the Board. He previously served as Australian High Commissioner to the United Kingdom from February 2005 until March 2008, after a distinguished career in the Australian Parliament as Minister for Communications, Information, Technology and Arts from 1996 to 2003.

On 16th December 2008 David Allen resigned from the Board and we thank him for his contribution over several years.

OUTLOOK 

We had an excellent 2008 based on our diversified Group with particularly strong performances from Public Relations (Bell Pottinger Group) and Sports Marketing (Fast Track).

The company's strategy for 2009 is to control costs, generate cash and focus on new business. We are concentrating on the growth opportunities we have which are mainly in international, sports marketing, digital, geopolitical and public sector work.

So far the impact on businesses affected by the economic downturn has been offset by growth in other businesses.

Lord Bell 

Chairman

11th March 2009

 

 

Consolidated Income Statement

Year ended 31 December 2008 

		2008	2007
		£'000	£'000
	Note
CONTINUING OPERATIONS
Revenue		277,394	206,589
Cost of sales		(165,304)	(110,080)
OPERATING INCOME		112,090	96,509
Operating expenses		(93,846)	(80,605)
Amortisation of intangible		(134)	(159)
OPERATING PROFIT		18,110	15,745
Share of results of associates		186	(73)
Investment income		456	214
Finance costs		(1,393)	(938)
Finance cost of deferred
consideration		(1,020)	(1,186)
PROFIT BEFORE TAX		16,339	13,762
Tax		(5,164)	(4,409)
PROFIT FOR THE YEAR FROM
CONTINUING OPERATIONS		11,175	9,353
DISCONTINUED OPERATIONS
Loss for the year from		-	(61)
discontinued operations
Loss for the year from sale of		-	(140)
associate
PROFIT FOR THE YEAR		11,175	9,152
Attributable to:
Equity holders of the parent		10,783	8,617
Minority interest		392	535
		11,175	9,152
EARNINGS PER SHARE	3
From continuing operations
Basic		19.87p	17.15p*
Diluted		19.59p	16.60p*
From continuing and discontinued
operations
Basic		19.87p	16.76p*
Diluted		19.59p	16.22p*

*Numbers have been restated to take into account the 1:5 share consolidation. Please refer to note 3 for further details.

Consolidated Statement of Recognised Income and Expense 

Year ended 31 December 2008

	2008	2007
	£'000	£'000
(Loss) on revaluation of available for sale
investments	(113)	(23)
Exchange differences on translation of foreign
subsidiaries	1,866	391
Net expense recognised directly in equity	1,753	368
Profit for the year	11,175	9,152
Total recognised income and expense for
the year	12,928	9,520
Attributable to:
Equity holders of the parent	12,536	8,985
Minority interest	392	535
Total recognised income and expense
relating to the year	12,928	9,520

Consolidated Balance Sheet as at 31 December 2008

	2008	2007
	£'000	£'000
Non-current assets
Goodwill	113,086	109,909
Other intangible assets	805	762
Property, plant and equipment	4,589	4,425
Investments in associates	858	488
Other investments	350	350
Available for sale investments	113	227
Due from deferred consideration	551	568
Deferred tax asset	829	1,191
	121,181	117,920
Current assets
Work in progress	2,019	1,560
Trade and other receivables	47,705	42,641
Cash and cash equivalents	6,804	10,196
	56,528	54,397
Total assets	177,709	172,317
Current liabilities
Trade and other payables	(69,536)	(58,574)
Current tax liabilities	(2,706)	(2,548)
Obligations under finance leases	(48)	(49)
Short-term provisions	(388)	(16,335)
	(72,678)	(77,506)
Net current liabilities	(16,150)	(23,109)
Non-current liabilities
Bank loans	-	(8,375)
Long-term provisions	(16,524)	(12,406)
Obligations under finance leases	(16)	(53)
	(16,540)	(20,834)
Total liabilities	(89,218)	(98,340)
Net assets	88,491	73,977
Equity
Share capital	14,264	13,319
Share premium account	37,121	32,217
Own shares	(4,952)	(4,381)
Equity reserve	32,385	32,385
Translation reserve	2,012	146
Accumulated profits/(losses)	8,731	(612)
Equity attributable to equity holders of the
Parent	89,561	73,074
Written put options over minority interests	(2,000)	-
Equity minority interest	930	903
Total equity	88,491	73,977

Consolidated Cash Flow Statement

Year ended 31 December 2008

		2008	2007
		£'000	£'000
	Note
Net cash inflow from operating
activities	5	21,277	15,200
Investing activities
Interest received		330	152
Dividend received from investment		126	63
Proceeds on disposal of property, plant
and equipment		39	60
Purchases of property, plant and equipment		(2,021)	(1,784)
Purchases of other intangible assets		(207)	(66)
Acquisition of an investment in an associate		(117)	-
Loans granted to associates		(59)	(178)
Acquisition of subsidiaries		(10,728)	(11,536)
Deferred consideration received		17	-
Net cash outflow from returns on
investment and servicing of finance		(12,620)	(13,289)
Financing activities
Dividend paid		(2,219)	(1,624)
Dividends paid to minorities		(366)	(113)
(Repayments of)/increase in borrowing		(8,375)	5,447
Repayment of loan notes		(480)	(1,333)
Repayments of obligations under
finance leases		(38)	(112)
Proceeds on issue of ordinary share capital		-	328
Purchases of own shares		(571)	(960)
Net cash (used in)/from financing
activities		(12,049)	1,633
Net (decrease)/increase in cash and cash
equivalents		(3,392)	3,544
Cash and cash equivalents at
beginning of year		10,196	6,652
Cash and cash equivalents at end
of year		6,804	10,196
Cash and cash equivalents comprise cash at bank, loan note deposits less overdrafts and
taking into account the following borrowings net cash was:
Cash and cash equivalents at end of year		6,804	10,196
Bank loans		-	(8,375)
Finance leases		(64)	(102)
Loan notes outstanding		(416)	(907)
Overall net cash		6,324	812

Notes:

1. Business Segments

For management purposes, the group is organised into three operating divisions - Public Relations, Advertising and Marketing Services and Research and Engagement. These divisions are the basis on which the group reports its primary segment information.

Principal activities are as follows:

Public Relations

The Public Relations division comprises some of the leading names in the industry, including Bell Pottinger, Good Relations, Harvard, Insight, Resonate, De Facto, TTA Public Relations and Corporate Citizenship. It is ranked number 1 PR Group in the UK in the PR Week public relations consultancy league table for 2007. It serves major UK and international brands, as well as governments, government departments, pharmaceutical and healthcare companies, charities, not-for-profit organisations, professional service firms, consumer brands and famous people 

Advertising and Marketing Services ('AMS')

The AMS division includes the VCCP Group, Fast Track and Teamspirit. It possesses specialist skills in advertising and marketing services - direct marketing, digital communication, search relations, sponsorship exploitation, point of sale, sales promotion and specialist media planning and buying. It also specialises in the niche markets of sport and financial services.

Research and Engagement

The Research and Engagement Division is made up of Opinion Leader Research, Ledbury Research, Brand Democracy, Caucusworld and Facts International. Opinion Leader Research is one of the UK's leading research consultancies and Ledbury Research provides research and advice to brands who market and sell to high net worth consumers.

The group's operations are located in the United Kingdom, Germany, Spain, the Middle East and USA. 

		Revenue		Operating Income
		2008	2007	2008	2007
		£'000	£'000	£'000	£'000
Class of business
Public Relations:
Continuing operations		178,955	131,738	61,352	54,094
		178,955	131,738	61,352	54,094
Advertising and Marketing Services:
Continuing operations		85,689	61,515	43,569	34,704
Acquisitions		631	-	209	-
		86,320	61,515	43,778	34,704
Research and Engagement:
Continuing operations		12,003	13,336	6,858	7,711
Acquisitions		116		102	-
		12,119	13,336	6,960	7,711
		277,394	206,589	112,090	96,509
Chime Central Costs			-	-	-
		277,394	206,589	112,090	96,509

		Operating Profit		Operating Profit Margin
		2008	2007	2008	2007
		£'000	£'000	%	%
Class of business
Public Relations:
Continuing operations		12,115	9,338	19.7%	17.3%
		12,115	9,338	19.7%	17.3%
Advertising and Marketing Services:
Continuing operations		6,132	5,557	14.1%	16.0%
Acquisitions		34	-
		6,166	5,557	14.1%	16.0%
Research and Engagement:
Continuing operations		366	1,395	5.3%	18.1%
Acquisitions		10	-
		376	1,395	5.4%	18.1%
		18,657	16,290	16.6%	16.9%
Chime Central Costs		(547)	(545)
		18,110	15,745	16.2%	16.3%

As required by IAS 14 (Segment Reporting) the prior year comparatives have been restated to reflect the change in management reporting of TTA Public Relations within the group. TTA Public Relations was previously reported within advertising and marketing services, it is now included within public relations. The effect of this change is as follows for 2007: revenue £3,274,000, operating income £2,965,000; operating profit £358,000.

2. Basis of preparation

The financial information set out in the announcement does not constitute the group's statutory accounts for the years ended 31 December 2008 or 2007 but is derived from those accounts. The financial information for the year ended 31 December 2007 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies The auditors have reported on the accounts to 31 December 2008 and 31 December 2007; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain a statement under s.237 (2) or (3) Companies Act 1985. Copies of the full accounts for 2008 will be circulated to shareholders and after approval at the Annual General Meeting will be delivered to the Registrar of Companies following the company's Annual General Meeting. Whilst the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards (IFRSs) this announcement does not in itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs in April 2009. 

The information in this preliminary announcement was approved by the board on 10th March 2009.

The consolidated income statement, balance sheet, statement of recognised income and expense and cash flow statement have been prepared on a basis consistent with the financial statements for the year ended 31 December 2008. 

Going Concern Basis

The Directors have prepared cash flow forecasts which indicate that the Group has adequate resources to continue in operational existence for the foreseeable future. In preparing these forecasts the directors have taken into account the following key factors:

The possible impact of the continued economic downturn on the Group's business;

Key client account renewals;

The level of committed and variable costs; and

Current new business targets compared to levels achieved in previous years.

The Group currently has a borrowing facility of £32 million which continues until July 2013. This facility is subject to banking covenants. 

At year end the Group was not utilising its loan facility.

The Directors have concluded, based on the cash flow forecasts, that it is appropriate to prepare the accounts on a going concern basis.

3. Earnings per share

From continuing and discontinued operations

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

	2008	2007
	£'000	£'000
Earnings
Earnings for the purpose of basic earnings per share being net profit attributable to the equity holders of the parent	10,783	8,617
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share	54,279,428	51,404,909
Effect of dilutive potential ordinary shares:	754,319	1,720,077
Share options and deferred shares
Weighted average number of ordinary shares for the purposes of diluted earnings per share	55,033,747	53,124,986

From continuing operations

	2008	2007
	£'000	£'000
Earnings
Net profit attributable to equity holders of the parent	10,783	8,617
Adjustments to exclude loss for the year from discontinued operations	-	61
Adjustment to exclude loss for the year from the sale of associate	-	140
Earnings from continuing operations for the purposes of basic earnings per share excluding discontinued operations	10,783	8,818

The denominators used are the same as those detailed above for both the basic and diluted earnings per share from continuing and discontinued operations.

From discontinued operations

	2008	2007
Basic	-	0.39p
Diluted	-	0.38p

The denominators used are the same as those detailed above for both the basic and diluted earnings per share from continuing and discontinued operations.

 Earnings per share have been restated to take into account the share consolidation carried out on 14 May 2008. The table below sets out the impact of this on earnings per share as previously reported;

	12 Months to 31 December 2007
	£'000	£'000
	As previously reported	As restated
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share	257,024,547	51,404,909
Effect of dilutive potential ordinary shares:
Share options and deferred shares	8,600,383	1,720,077
Weighted average number of ordinary shares for the purposes of diluted earnings per share	265,624,930	53,124,986
Earnings per share
From continuing operations:
Basic	3.43p	17.15p
Diluted	3.32p	16.60p
From continuing and discontinued operations:
Basic	3.35p	16.76p
Diluted	3.24p	16.22p

4. Dividends

	2008	2007
	£'000	£'000
Amounts recognised as distributions to equity holders in the year (approved):
Interim dividend for the year ended 31 December 2008 of 1.54p (2007: 1.10p) per share	867	581
Final dividend for the year ended 31 December 2007 of 2.40p (2006:2.00p) per share	1,352	1,043
	2,219	1,624
Amounts not recognised as distributions to equity holders in the year (declared):
Proposed final dividend for the year ended 31 December 2008 of 3.18p (2007 - 2.40p) per share	1,789	1,262
	1,789	1,262

The proposed final dividend is subject to shareholder approval at the Annual General Meeting and has not been included as a liability as at 31 December 2008. The dividend will be paid on 19 June 2009 to those shareholders on the register at 29 May 2009. The expected ex-dividend date is 27 May 2009.

Under an arrangement dated 3 April 1996, The Chime Communications Employee Trust which holds 1,508,965 ordinary shares representing 2.6% of the company's called-up share capital, has agreed to waive dividends on 804,108, the difference being those shares held under the deferred share scheme.

Dividends per share have been restated to take into account the share consolidation carried out on 14 May 2008. Before restatement the interim dividend per share for the year ended 31 December 2007 was 0.22p and the final dividend per share for the year ended 31 December 2007 was 0.48p.

5. Notes to the consolidated cash flow statement

	2008	2007
	£'000	£'000
Operating profit	18,110	15,745
Adjustments for:
Loss from discontinued operation	-	(86)
Share based payment expense	1,292	968
Translation differences	727	119
Depreciation of property, plant and equipment	1,872	1,403
Amortisation of other intangible assets	30	19
Amortisation of acquired intangibles	134	159
Loss on disposal of property, plant and
equipment	17	29
(Decrease)/increase in provisions	(418)	281
Operating cash flows before movements in
working capital	21,764	18,637
Increase in work in progress	(459)	(840)
Increase in receivables	(4,878)	(8,027)
Increase in payables	11,274	10,169
Cash generated by operations	27,701	19,939
Income taxes paid	(4,961)	(3,869)
Interest paid	(1,463)	(870)
Net cash from operating activities	21,277	15,200

6. Reconciliation of equity attributable to equity holders of parent

	2008	2007
	£’000	£’000
Balance at 1 January	73,074	59,858
Dividends paid	(2,219)	(1,624)
Credit in relation to share based payments	892	557
Purchase of own shares	(571)	(1,160)
Own shares disposed of on exercise of options	-	200
Net profit for the year attributable to equity holders of the parent	12,536	8,985
Increase in share capital and share premium	5,849	6,258
Balance at 31 December	89,561	73,074

7. Acquisitions

On 29 February 2008, the Group acquired 55% of the issued share capital of Naked Eye Research Limited. The fair value of the consideration given for the acquisition was £96,822. An initial payment of £50,000 was satisfied in cash. Costs relating to the acquisition amounted to £33,914, which have all been paid during the year. The Group has provided for contingent consideration of £50,000 to date, dependent on profits to 2013. This has been discounted to a net present value of £46,822, with the resulting discounting charge of £3,178 to be taken through the income statement over the period. 

On 20 March 2008, the Group acquired 100% of the issued share capital of MC Bio Communications Limited. The fair value of the consideration given for the acquisition was £313,581. An initial payment of £1 was satisfied in cash. Costs relating to the acquisition amounted to £49,255, all of which have been paid during the year. The Group has provided for contingent consideration of £400,000 to date, dependent on profits to 2013. This has been discounted to a net present value of £313,580, with the resulting discounting charge of £86,420 to be taken through the income statement over the period. 

On 2 April 2008, the Group acquired 100% of the issued share capital of Bankbrae Holdings Limited, holding company of The Sports Business Limited. The fair value of the consideration given for the acquisition was £361,838. An initial payment of £200,000 was satisfied in cash. Costs relating to the acquisition amounted to £65,752, all of which have been paid during the year. The Group has provided for contingent consideration of £200,000 to date, dependent on profits to 2011. This has been discounted to a net present value of £161,838, with the resulting discounting charge of £38,162 to be taken through the income statement over the period. 

The following table sets out the Group's assessment of the consolidated fair values of the liabilities acquired and the goodwill. The fair value of the net liabilities acquired was £11,151, resulting in goodwill of £932,313 which has been capitalised as an intangible fixed asset. 

	Book  value £'000	Fair value adjustments £'000	Fair  value £'000
Net assets acquired:
Tangible assets
Trade and other receivables	173	-	173
Cash and cash equivalents	133	-	133
Trade and other payables	(311)	-	(311)
	(5)	-	(5)
Minority interest			(6)
			(11)
Goodwill			932
Total consideration			921
Satisfied by:
Cash			250
Directly attributable costs			149
Deferred consideration			522
			921
Net cash outflow arising on acquisition:
Cash consideration			399
Cash and cash equivalents acquired			(133)
			266

Goodwill arises from anticipated profitability and future operating synergies from the combination

The acquired businesses have contributed £62,999 to the operating profit of the Group for the year to 31 December 2008.

The Group additionally spent £10,319,000 on consideration and deferred consideration associated with other acquisitions of the group. This included £9,583,000 to satisfy the deferred consideration relating to VCCP Limited. £5,854,000 of shares were also issued to satisfy this consideration. £127,000 of cash paid in the year relates to costs in respect of prior year acquisitions. In addition £16,000 was paid to acquire an additional 39% of Bullnose Limited. Therefore the net cash effect in respect of subsidiary undertakings was £10,728,000.

8. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. There were no significant transactions between the Group and its associates.

ENDFR SFMEESSUSELD

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Related Shares:

CHW.L