Final Results

25th March 2015

CHIME COMMUNICATIONS PLC

ANNOUNCEMENT OF AUDITED PRELIMINARY RESULTS FOR

THE YEAR ENDED 31ST DECEMBER 2014

A year of transformation and growth

Strengthened position as an international communications and sports marketing group

Chime Communications plc, the international communications and sports marketing group, today announces its full year results for the year ended 31st December 2014.

OPERATIONAL HIGHLIGHTS

· Group now structured into four operating divisions: Sport and Entertainment, Advertising and Marketing Services, Healthcare Communications and Insight and Engagement

· Strong growth in income and profits in all four divisions - like for like growth2 in operating profits of 10%

· Net new business of £31 million already won for 2015 compared to £23 million won in the same period in 2014

· Two significant contracts delayed from 2014 are in final stages of negotiation

· Zak Brown, currently Chief Executive of JMI, appointed as Chief Executive of our Sport and Entertainment division, reporting to Lord Coe and restructuring plan now being developed. Roopesh Prashar has also been appointed as Finance Director of this division

· Major events in 2015 include European Games in Baku and the Rugby World Cup in the UK and we are involved in both

· Expansion into US continuing following successful acquisitions of JMI and SJX

· Advertising and Marketing Services had a successful year with double digit income growth and margin improvement

· Healthcare and Insight and Engagement divisions continue to grow ahead of the marketplace

· Board further strengthened in 2014 through the appointment of Lord Coe

HEADLINE FINANCIAL HIGHLIGHTS1

· Net bank debt as at 31st December 2014 of £53.1 million compared to a new five year facility of £130 million agreed with RBS and HSBC until September 2019

· Final dividend increased with total dividend for the year increased by 14% to 8.40p (2013: 7.34p)

Christopher Satterthwaite, Chief Executive of Chime Communications, said:

"2014 was a year of good growth and saw the development of CSM as a global player in the sport and entertainment marketing businesses. Our communications businesses continue to grow and with the proportion of shared clients also increasing, we are sharpening our competitiveness as an international communications and sports marketing group".

STATUTORY FINANCIAL HIGHLIGHTS

Note: 1. All numbers and comments shown in this section are headline unless otherwise stated. The appendix to this announcement shows a reconciliation of these headline numbers to the reported numbers. The headline numbers adjust for the following:

· Deemed remuneration charge add back in respect of the change in accounting policy adopted in the year ended 31st December 2012 for earn-out payments including LLP capital based payments.

· Add back of charges to the income statement in respect of amortisation of intangible assets, impairment of goodwill (see note 7) and costs relating to acquisition and restructuring.

· Add back of results from businesses classed as discontinued that do not meet the definition of discontinued operations under the accounting standard.

2. Like for Like comparisons are calculated by taking current year actual results (which include acquisitions from the relevant date of completion) compared with prior year actual results, adjusted to include the results of acquisitions for the commensurate period in the prior year.

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OVERVIEW

Performance in 2014 was well ahead of 2013 with growth in operating income and profit across all four divisions. The performance of the Advertising and Marketing Services division was particularly strong. Our Sports and Entertainment division has continued to expand both its international reach and its reputation and we are now being asked to pitch for more international briefs than ever before.

We have now restructured the Group from five divisions into four, with the Public Relations division being integrated into two other divisions. The Good Relations branded businesses have become part of the Sport and Entertainment division, with the other businesses joining the Chime Specialist Group, part of the Advertising and Marketing Services division.

STRATEGY

We continue to develop our strategic capability as an international sports marketing and communications group and we continue to invest in Sport and Entertainment and Advertising and Marketing Services businesses particularly in new geographies and disciplines.

KEY PERFORMANCE INDICATORS

Average Fee per Client

Average fee per client for 2014 was £111,000, compared to £99,000 in 2013. 289 clients paid us over £100,000 in 2014 compared to 247 in 2013. Our largest client represented 8.6% of total operating income (2013: 12.6%). The breadth and quality of our client list continues to improve and our top 30 clients now represent 41% of total income compared to 44% in 2013. 

Income from Shared Clients

The Group acted for 1,786 clients in 2014 compared to 1,689 in 2013. 306 of these clients used more than one of our businesses (2013: 284) which represented 70% of total operating income (2013: 68%). 

Operating Profit Margin

Operating profit margin for 2014 was 16.2% compared to 15.5% in 2013 reflecting our focus in 2014 on margin, particularly in our Advertising and Marketing Services division. 

Income from Overseas Offices

Income from overseas offices increased by 53% in 2014 and as a percentage of total income increased from 18% in 2013 to 24% in 2014. International expansion continues to be a major part of our growth strategy.

Earnings per Share1

Earnings per share in 2014 increased 12% to 22.0p (2013: 19.7p).

HEADLINE DIVISIONAL PERFORMANCE

Sport and Entertainment

Our Sport and Entertainment division continued to grow its income, profits and international reach in 2014. Overall the three major events in 2014, the World Cup in Brazil, the Winter Olympics in Sochi and the Commonwealth Games in Glasgow were successful for us, providing a strong base from which we can build for the Olympics in Brazil in 2016 and the World Cup in Russia in 2018 and for providing invaluable learning for those future events.

We are investing in global management capability in this division under the chairmanship of Lord Coe with Jim Glover taking on a new role as Deputy Chairman leading the increasing number of global accounts and new business opportunities. Zak Brown, currently CEO of JMI, has now been appointed CEO of this division. We have appointed Roopesh Prashar as Finance Director of this division. This management team has commenced an investment and restructuring programme to ensure we are well placed to achieve our future growth targets and properly control and forecast the major contracts we are winning.

We continue to operate strongly in seven of the top ten sports by value in the world and as the global sports market continues to grow, we are exploring many new opportunities, particularly in North America where Zak Brown's experience will be invaluable.

In the 2015 Rugby World Cup in the UK we are handling Land Rover's sponsorships and managing 82 players who are expected to play from the eight top world ranked countries.

Our major acquisition in November 2013, JMI (motorsport business based in the UK and US) has integrated well into the Group, continued its expansion and had double digit growth in both income and profits.

Good Relations, our brand and corporate public relations business, grew profits by over 10% and is expected to show continuing strong growth as it increases its international expansion using the CSM international network. Global new business pitches using this model are already underway.

New business wins include: International Paralympic Committee, Unilever, Ford, VW, Epson, Bose, Haas F1, Verizon IndyCar Series, Williams Martini Racing, Banco do Brasil, Fédération Equestre Internationale, FIA Formula E Competition, PruHealth/Vitality, Waitrose, Hardys, Clifford Chance, Remy, Volvo Ocean Race, Rio 2016, Bradesco, Saudi Olympic Committee, Coca-Cola, MetLife, Infiniti, Samsung and Southeastern.

Advertising and Marketing Services

In 2014 this division focused on developing the new clients it won in 2013 as well as margin improvement. VCCP was also the advertising agency with the most new client opportunities and the agency with the most wins in the UK (Source: AAR).

This division now includes Corporate Citizenship (corporate and social responsibility), Harvard (technology based communications) and inEvidence (customer reference) which have come together with Teamspirit and Pure Media to form the Chime Specialist Group of businesses under the leadership of Joanne Parker.

New business wins include: BMW Motorad, Kia, World First, Royal London, ING (Australia), Qatari Diar, BILD and CBRE.

Healthcare Communications

A year of successful consolidation of previous acquisitions with the strong focus on market access and patient data delivering both double digit income and profit growth. All Open Health communications agencies showed strong growth and we continue to invest in digital communications.

New business wins include: Astra Zeneca, Eisai, Celgene, Novartis and Janssen.

Insight and Engagement

This division has grown its operating profit mainly due to the continued growth of its high margin digital research business and the development of a 'full service' offering to the research and insight marketplace.

New business wins include: Paypoint, Brakes, npower, Allianz, Ulster Bank and Anglian Water.

BOARD AND MANAGEMENT CHANGES

In May 2014 Lord Coe joined the Board of Chime, further improving our ability to expand in the fast growing sports marketing sector. He also remains as Executive Chairman of our Sport and Entertainment division. Martin Glenn will resign from the Board on 12th May 2015 following his appointment as Chief Executive Officer of the Football Association. We would like to thank Martin for his valuable contribution since his appointment in August 2013.

Zak Brown has been appointed CEO of our Sport and Entertainment division and will join the Executive Management Board. He is an American businessman and former professional racing driver who currently lives in Surrey. He founded JMI in 1995. His accomplishments as a sports marketeer have been reflected through multiple industry recognitions including as a marketeer of the year by Promo magazine, being named four times in the INC 500 Fastest Growing Private Companies of the Year and his inclusion in the Sports Business Journal's Forty under 40 Hall of Fame, having been presented with the award three times.

CORPORATE ACTIVITY

2014 was a year in which we focused mainly on organic growth and consolidating acquisitions made in previous years. We did however, acquire three smaller sports businesses, SJX, Blaze and ABC, which have improved our activities in the US and rugby player management. 

CASH FLOW AND BANKING ARRANGEMENTS

Net bank debt at 31st December 2014 was £53.1 million compared to £39.8 million at 31st December 2013. 

An increased facility has been agreed with RBS and HSBC for £130 million. This runs until September 2019, with an interest rate of between 1.50% and 2.9%, depending on use of the facility compared to EBITDA and the level of borrowing. The estimated earn-outs (which include consideration treated as deemed remuneration) payable in 2015 total £11.4 million of which £3.5 million is payable in shares or loan notes.

As expected there was a working capital outflow in 2014 reflecting both the change in working capital profile of the Group and the delay in completion of some major sporting contracts. Whilst we still expect to be cash generative, the nature of our business now will, from time to time, require working capital investment. At 31st December 2014 the company had a working capital requirement of £10.2 million compared to a negative requirement of £1.8 million at 31st December 2013.

TAXATION

The effective tax rate for 2014 was 22.5% compared to 25.8% for 2013. This lower tax rate was due to the use of historical tax losses in the US following the acquisition of JMI. Going forward lower tax rates in the UK will be offset by higher tax rates in some international territories. 

DIVIDENDS

The Board proposes a final dividend of 5.87p per share (2013: 5.14p per share). This will be payable on 12th June 2015 to shareholders on the register at 22nd May 2015. The ex-dividend date is 20th May 2015. 

Total dividend for the year will be 8.40p compared to 7.34p in 2013. An increase of 14%. This represents a dividend cover of 2.6 times, compared to 2.4 times in 2013 and 3.0 times in 2012.

OUTLOOK

We continue to grow both our sports marketing and communications businesses with like for like profit growth of 10% in 2014.

As sport and entertainment properties provide the opportunity for global brands to reach mass audiences as never before, we are investing in our global management capabilities in the Sport and Entertainment Division in order to compete for major global contracts. The value of sport and entertainment rights therefore continues to grow and we believe the long term prospects for our Sport and Entertainment business are extremely good. However, the nature of large sporting contracts and the cycle of sporting events mean there will be inevitable highs and lows in our sports business.

Digital marketing continues to outstrip traditional advertising growth rates which plays to the strengths of our Advertising and Marketing Services division. Our Healthcare Communications and Insight and Engagement divisions are also trading strongly and are well placed for good organic growth ahead of the marketplace.

With sports marketing and digital marketing at the heart of the Chime group and the strength of our brands we look forward to long term growth.

Appendix - Reconciliation of Income Statement to headline results for the year ended 31 December 2014

The reconciliation below sets out the headline results of the group and the related adjustments to the reported Income Statement that the directors consider necessary in order to provide an indication of the underlying trading performance.

The headline numbers have been adjusted for the following:

· Deemed remuneration charge and finance cost add back in respect of employment linked earn-out payments including LLP capital based payments.

· Add back of charges to the income statement in respect of loss on disposal of subsidiaries, amortisation of intangible assets, impairment of goodwill and costs relating to acquisition and restructuring.

· Add back results from businesses classed as discontinued operations by management, not meeting the requirements to be disclosed as discontinued for statutory purposes under the relevant accounting standard. These include Ex Nihilo Limited, Traffic Gmbh, VCCP Me, Rough Hill Limited, UTR Events Limited, Fast Track Agency Scotland Limited and Essentially Australia Rugby businesses ( 2013: MMK-Good Relations Group GmbH and Conduit Marketing Limited). 2013 has been restated for these businesses.

· The group was restructured in early 2015 and the segmental has been prepared to reflect changes in the way the group operates and the manner in which information in respect of decision making is presented. The Public Relations Divisions has been split with Good Relations reported as part of CSM. All other businesses previously within the Public Relations Division are now reported as part of Advertising Marketing Services. 2013 has been restated for this restructure.

Appendix - Reconciliation of Business Segments to adjusted results for the year ended 31 December 2014

The headline numbers have been adjusted for the following:

· Deemed remuneration charge and finance cost add back in respect of employment linked earn-out payments including LLP capital based payments.

· Add back of charges to the income statement in respect of loss on disposal of subsidiaries, amortisation of intangible assets, impairment of goodwill and costs relating to acquisition and restructuring.

· Add back results from businesses classed as discontinued operations by management, not meeting the requirements to be disclosed as discontinued for statutory purposes under the relevant accounting standard. These include Ex Nihilo Limited, Traffic Gmbh, VCCP Me, Rough Hill Limited, UTR Events Limited, Fast Track Agency Scotland Limited and Essentially Australia Rugby businesses ( 2013: MMK-Good Relations Group GmbH and Conduit Marketing Limited). 2013 has been restated for these businesses.

· The group was restructured in early 2015 and the segmental has been prepared to reflect changes in the way the group operates and the manner in which information in respect of decision making is presented. The Public Relations Divisions has been split with Good Relations reported as part of CSM. All other businesses previously within the Public Relations Division are now reported as part of Advertising Marketing Services. 2013 has been restated for this restructure.

Consolidated Income Statement

Year ended 31 December 2014

Consolidated Statement of Comprehensive Income

Year ended 31 December 2014

Consolidated Balance Sheet as at 31 December 2014

Consolidated Balance Sheet as at 31 December 2014 (continued)

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

Year ended 31 December 2014

Notes:

1. Basis of preparation

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2014 or 2013. Statutory accounts for 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered following the company's annual general meeting. The auditor's reports on both the 2014 and 2013 accounts were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498(2) or (3) of Companies Act 2006. 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 2014.

The information in this preliminary announcement was approved by the Board on 25 March 2015.

The consolidated income statement, consolidated balance sheet, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated cash flow statement have been prepared on a basis consistent with the financial statements for the year ended 31 December 2014.

Going Concern Basis

The Group meets its day to day working capital requirements through a £5 million revolving credit overdraft facility and a committed facility of £125 million which matures in September 2019.

In preparing forecasts the directors have taken into account the following key factors:

· The rate of growth of the UK and global economy on the Group's business during the economic recovery;

· Key client account renewals;

· Planned acquisitions and disposals;

· Anticipated payments under deemed remuneration and deferred and contingent consideration;

· The level of committed and variable costs; and

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

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current facility and banking covenants.

The directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Forward looking statements

The preliminary announcement contains certain forward looking statements in respect of Chime Communications plc and the operation of its subsidiaries. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. Nothing in this announcement should be construed as a profit forecast.

2. Business Segments

For management purposes the Group is organised into operating segments. At the end of 2014 the operational structure was amended as shown below.

The principal activities in 2014 were as follows:

Sport & Entertainment

CSM Sport & Entertainment is a group of internationally recognised agencies, working together to put clients and people at the heart of the world's greatest experiences in sport and entertainment. Working with brands, rights holders, governing bodies, governments and athletes across the globe, CSM specialises in strategic consultancy, rights sales, sponsorship activation, hospitality, branding and wayfinding, athlete management and communications across major sporting events.

Advertising and Marketing Services ('AMS')

The AMS division includes the VCCP Partnership and the Chime Specialist Group. VCCP operates in advertising and marketing services, direct marketing, digital communication, search relations, point of sale, sales promotion, data consultancy and technical design, multimedia content, youth marketing and experiential, marketing consulting, retail and shopper marketing and specialist media planning and buying. The Specialist Group includes agencies operating in niche markets; corporate responsibility and sustainability consultancy; for technology brands; providing customer reference and advocacy and; in professional and financial services.

Insight & Engagement

The Insight & Engagement division brings together researchers, technologists and insight specialists who deliver to clients, globally, in real time, actionable solutions. The Division has particular expertise in delivering clients in FMCG, financial services, utilities and retail with experience performance improvement plans, mystery shopping programmes and advertising and brand tracking. The Insight & Engagement division includes leading specialist brands such as Watermelon - a specialist digital agency, CherryPicked - a specialist recruitment agency, Facts International - a specialist fieldwork agency and full service agencies Opinion Leader and CIE. 

Healthcare

OPEN Health is a healthcare communications and market access group. It comprises ten different specialist businesses that bring a breadth of expertise focussed principally on pharma, health device and diagnostic clients. OPEN Health's companies cover most aspects of the communications mix including advertising, PR, medical communications, market access consulting, real world data collection, market research and patient engagement programmes.

Reorganisation

We have reorganised our operating segments reducing to four from five. The companies that previously made up the Public Relations Division, with the exception of Good Relations, have joined Teamspirit and Pure Media as the Chime Specialist Group and will operate alongside VCCP forming the Advertising and Marketing Services Segment. Good Relations has joined CSM and will report under the Sport and Entertainment Segment. The Insight and Engagement and Healthcare divisions remain unchanged.

3. Earnings per share

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

Diluted earnings per share is calculated on the profit for the year attributable to parent company shareholders divided by the weighted average number of ordinary shares outstanding during the year adjusted for the potentially dilutive impact of employee share incentive schemes and shares to be issued as part of deferred or contingent consideration on acquisitions of subsidiaries.

Some share options that had a higher purchase price than the average market price of the shares for the year ended 31 December 2014 were outstanding. These options have been excluded from the calculation of diluted earnings per share as they would have been antidilutive.

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

4. Dividends

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The dividend will be paid on 12 June 2015 to those shareholders on the register at 22 May 2015. The ex-dividend date is 21 May 2015.

Under an arrangement dated 3 April 1996, The Chime Communications Employee Trust which holds 731,790 ordinary shares representing 0.7% of the Company's called-up share capital, has agreed to waive dividends over 191,316 shares (0.2% of the company's called up share capital), the difference being those shares held under the deferred share scheme.

5. Notes to the cash flow statement

6. Business combinations

In 2014, the Group made a number of acquisitions in order to grow the business.

The Sport and Entertainment division made 3 main acquisitions as follows:

· The Blaze Agency Pty Ltd, a Rugby player management and marketing agency, based in Australia. The acquisition will further enhance the geographical coverage of CSM Sport and Entertainment's activities within the Asia Pacific market; and

· ABC Sports Management Limited, one of the UK's top athlete management businesses, with particular strength in rugby union. It will further enhance CSM's Essentially, a leading sponsorship and athlete management agency; and

· SJX Business, a sports and entertainment marketing business based in Connecticut, United States. The acquisition will significantly expand CSM Sport and Entertainment's business in the United States.

The Blaze Agency Pty Ltd

On 5 March 2014 the group acquired 100% of The Blaze Agency Pty Ltd ("Blaze"), a company incorporated in Australia, for initial consideration of AUD$2,000,000 (£1,076,000), which was paid in cash.

Additional consideration is payable contingent on the results of the business, capped at the maximum of AUD$2,000,000 (£1,070,000) (undiscounted). Deemed remuneration of £7,597 has been provided, which has been discounted for financing costs. The deemed remuneration is expected to be paid in 2016 and 2019. The total maximum consideration and deemed remuneration payable for Blaze is AUD$4,000,000 (£2,146,000).

Blaze was acquired by Chime's Sport and Entertainment division.

The fair value of the net assets acquired is detailed below.

The adjustment to intangible fixed assets is to recognise £577,000 of intangibles relating to customer contracts and relationships.

The adjustment to other current assets is the recognition of a deferred tax asset on intangible assets.

Acquisition related costs amounting to £135,000 have been expensed during the period and are included in operating expenses.

Goodwill represents the specialist skills held by Blaze.

Blaze contributed revenue of £271,797 and an operating profit of £64,159 (after deemed remuneration charge of £7,597) to the results of the Group since acquisition. If the acquisition had been completed at the beginning of the period, management estimate that its contribution to Group revenue for the period would have been £332,774 and its contribution to Group operating result would have been a profit of £61,623.

ABC Sports Management Limited

On 24 September 2014 the group acquired 100% of ABC Sports Management Limited ("ABC"), a company incorporated in the United Kingdom, for initial consideration of £810,000, of which £585,000 was paid in cash and £225,000 was paid in shares.

Additional consideration is payable contingent on the results of the business, capped at the maximum of £650,000 (undiscounted). Deferred consideration of £100,000 has been provided for and expected to be paid in 2015. Deemed remuneration of £24,357 has been provided, which has been discounted for financing costs. The deemed remuneration is expected to be paid in 2017 and 2020. The total maximum consideration and deemed remuneration payable for ABC is £1,560,000.

ABC was acquired by Chime's Sport and Entertainment division.

The fair value of the net assets acquired is detailed below.

The adjustment to intangible fixed assets is to recognise £308,000 of intangibles relating to customer contracts and relationships.

The adjustment to other current assets is the recognition of a deferred tax asset on intangible assets.

Acquisition related costs amounting to £182,000 have been expensed during the period and are included in operating expenses.

Goodwill represents the specialist skills held by ABC.

ABC contributed revenue of £267,380 and an operating profit of £77,373 (after deemed remuneration charge of £24,357) to the results of the Group since acquisition. If the acquisition had been completed at the beginning of the period, management estimate that its contribution to Group revenue for the period would have been £681,933 and its contribution to Group operating result would have been a loss of £68,665.

SJX Business

On 27 October 2014 the group acquired a 100% of the business and assets of the SJX Business ("SJX"), a business based in the United States, for initial consideration of USD$8,490,000 (£5,303,000), of which USD$5,590,000 (£3,719,000) was paid in cash and USD$2,540,000 (£1,584,000) was paid in shares.

Additional consideration is payable contingent on the results of the business, capped at the maximum of USD$19,510,000 (£12,168,000) (undiscounted). Deferred consideration of £2,515,183 has been provided for and deemed remuneration of £373,502 has been provided, which have been discounted for financing costs. The deferred consideration and deemed remuneration is expected to be paid in 2016, 2018 and 2020. The total maximum consideration and deemed remuneration payable for SJX is USD$28,000,000 (£17,463,000).

SJX was acquired by Chime's Sport and Entertainment division.

The fair value of the net assets acquired is detailed below

The adjustment to intangible fixed assets is to recognise £2,595,000 of intangibles relating to customer contracts and relationships. 

Goodwill represents the specialist skills held by SJX. A tax deduction is available in the United States for the goodwill acquired.

Acquisition related costs amounting to £467,000 have been expensed during the period and are included in operating expenses.

SJX contributed revenue of £854,433 and an operating loss of £207,532 (after deemed remuneration charge of £373,502) to the results of the Group since acquisition. If the acquisition had been completed at the beginning of the year, management estimate that its contribution to Group revenue for the period would have been £3,647,000 and its contribution to Group operating result would have been a profit of £2,191,000.

Just Marketing Inc.

On 20 November 2013 the group acquired 100% of Just Marketing Inc. ("JMI") a company incorporated in the United States of America and determined provisional fair values at the date of acquisition. These fair values have been adjusted, with a corresponding impact on goodwill as detailed below.

The fair value adjustments arise as a result of recognition of intangible assets relating to customer contracts and relationships and brand name. The adjustment to other current assets is recognition of deferred tax liability on intangible assets.

The intangible assets recognised were Brand name of £2,746,103 and Customer contracts and relationships of £10,182,949.

A tax deduction is available in the United States for the goodwill acquired.

Cash flow on acquisitions

Total deferred consideration and deemed remuneration of £5,302,000 (2013: £11,498,000) was settled in cash during the year in respect of acquisitions made in previous and current year.

7. Goodwill

Other changes in respect of prior year acquisitions predominantly include:

· Changes in respect of prior year acquisitions include revisions to the estimate of deferred consideration payable relating to acquisitions completed under IFRS (2004) and to the intangible calculation on JMI Inc.

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. Transactions between the Group and its associates are disclosed below.

Trading transactions

During the year, Group companies entered into the following transactions with related parties who are not members of the Group.