TIDMFUZ8
RNS Number : 9706X
Fuse 8 PLC
15 December 2010
Date: 15 December 2010
On behalf of: Fuse 8 plc ('Fuse 8' or 'the Company')
Embargoed until: 0700hrs
Fuse 8 plc
Interim results for the six months ended 30 September 2010
Fuse 8 plc (AIM: FUZ 8), the full service digital marketing
agency, is pleased to announce its interim results for the six
month period ended 30 September 2010.
Financial Highlights
-- Turnover of GBP2.40 million (2009: GBP2.06million)
-- Revenue of GBP1.63 million (2009: GBP1.54million)
-- Headline Operating Profits of GBP229,000 (2009:
GBP384,000)
-- Cash balance GBP384,000 (2009: GBP149,000)
Operational Highlights
-- Completion of reverse acquisition and admission to AIM in
July 2010
-- First step of strategic plan implemented with acquisition of
digital agency in London in November 2010
-- New business wins include: Adidas, Asda and Soreen
Commenting on the Interim results Nigel Hunter, Chief Executive
Officer said:
"We believe that AIM will be a great platform for us to achieve
the Company's growth plans and, with this in mind, I am very
pleased to be able to report such robust maiden results.
"We are optimistic for the next half and look forward to
continuing to implement Fuse 8's strategic plan of growing the
business organically while adding to our technical and service
offer through targeted acquisitions."
For Further Information please contact:
Fuse 8 plc
Nigel Hunter/Graeme Burns Tel +44 (0)113 260 4600
finnCap
Geoff Nash/ Charlotte Stranner Tel +44 (0) 20 7600 1658
Redleaf Communications fuse8@redleafpr.com
Rebecca Sanders-Hewett/ Lucy Salaman Tel +44 (0) 20 7566 6700
Notes to editors:
Fuse 8 is a full service digital marketing specialist covering a
wide spectrum of services, ranging from creative development
services to Search Engine Optimisation (SEO). Fuse 8, has offices
in Leeds and Russia, centres most of its services around enhancing
clients' reputations by helping to market and build their brands.
The Group's principal expertise is in assisting its clients to
build, grow and develop their online brands and, through this, help
to drive sales and market share growth.
Fuse 8's current service offering encompasses the six main
sectors below:
-- Online Design & Build
-- Digital Marketing
-- Creative Services
-- Media Planning & Buying
-- Marketing Consultancy
-- Online Press & Public Relations, Online Content
Fuse 8 was founded in 2000 by Mark Walton and Andy Hutchinson.
As an early adopter of online technology, the Company has spent ten
years developing and refining its digital marketing offering and
has grown rapidly in a fragmented marketplace. The business now
services more than 100 clients across the UK, Continental Europe,
and the USA. Major clients currently include: Adidas, Arla Foods,
Alton Towers, Asda, British Airways, Central Office of Information,
Manpower, Miele, Persimmon Homes, Soreen, and UK Trade &
Investment.
Fuse 8 is listed on the London Stock Exchange under the symbol
FUZ8. Further information on the Company can be found at
www.fuse8.com
INTERIM MANAGEMENT REPORT - SIX MONTHS TO 30 SEPTEMBER 2010
Chief Executive's Statement
It gives me great pleasure to deliver our maiden interim report
following the Company's admission to AIM in July 2010.
During the six months to 30 September 2010 the Company has
increased sales and, more importantly, revenues by some 17% and 6%
respectively representing a solid start to our fifth consecutive
year of revenue growth.
Fuse 8's client offering combines conventional marketing
services with fully integrated online and digital marketing
services which enable it to provide clients with a seamless service
across all media channels. The benefits of the digitally focussed
services we provide our clients are reflected in our continued
revenue growth. The challenging economic climate of the last two
years has meant that clients are looking for more tangible value
for their marketing spend, and the highly measurable results
achieved through digital communications help to ensure a more
robust digital market. Accordingly, increasing proportions of our
client's budgets are being spent on digital communications and our
ten year heritage in digital marketing means that clients need and
value the expertise we can apply to servicing them.
Clients continue to utilise the skills of Fuse 8 for both their
digital and traditional marketing activities. However, the latest
trends and new business activity continues to shift the majority of
activity into the digital arena. Demand and appetite for new
innovations has grown steadily over the period with clients old and
new looking particularly to mobile technology and applications to
form part of their overall digital communications strategy.
Fuse 8 is not immune to the economic difficulties affecting the
UK and Europe. The Company has seen some clients, most noticeably
in the public sector, being slower to commit to previously agreed
plans or spend. However a diverse client base and a focus on new
business has allowed the Company to continue growing revenue and to
invest in its digital offering for clients. By producing measurable
results Fuse 8 has become a strong player in this value conscious
environment.
Fuse 8's office in Russia offers an offshore technology and
digital production centre that has been operating successfully for
the last seven years. Currently 35 highly skilled employees act as
our centre of excellence in Russia delivering a high quality
service for clients.
For Fuse 8's first interim report I am pleased to announce good
progress on some key facets of the Company's development and,
following this very active period, the business is better
positioned than ever to deliver expert communication solutions to
clients across a wider geography in the maturing digital arena.
Financial Overview
The balance sheet remains sound and for a business of our size
we have robust cash balances and net current assets. Underlying
cash generation continues to be positive although as a result of
continually growing sales some of our cash reserves are utilised as
working capital.
Significant investment has been made in business development
activities including an increased business development resource,
staff training and additional sales support. As a result, operating
margins have been impacted slightly, though long-term delivery of
profits continues. Whilst the operating margin of 14% achieved in
the period is slightly below prior year levels, it is in line with
the Board's expectations due to increased investment in staff and
resources to drive organic growth. The Company anticipates that
margins will return to previous levels as the Company continues the
growth in revenue and leverages the advantage that our Russia
office affords.
Strategy
As stated at the time of Fuse 8's admission to AIM, the
Company's plan is to grow income and profits, steadily over time,
both organically and by acquisition, to become one of the
pre-eminent digital marketing agencies in the UK. The financial and
operational achievements of the first six months represent positive
steps in that plan.
The Company's organic growth is supported by investment in the
marketing technology toolbox that we use to deliver services that,
in turn, help to continually enhance our offering. The Board
recognises that a greater spread of resource throughout the UK and
London in particular, will help increase the Company's efficiency
and profile and to that end is regularly appraising acquisition
opportunities.
New Business
New business opportunities continue at pace, with Fuse 8's core
digital services providing the Company with a firmer foothold with
existing clients as well as helping to create dialogue with
potential new clients.
Fuse 8 has three strategic areas from which it targets new
business; cross selling of services to its current clients; winning
new clients; and through strategic partnerships. New client wins
during the period include Adidas, Asda and Soreen.
Post Period
Following the end of the six months under review Fuse 8
completed its first acquisition. Delete Digital Marketing, which
was acquired in November, gives the Group both the London office it
sought and a complementary team of experienced digital specialists.
Delete also has a number of important clients including a range of
high quality consumer and business brands such as BaByliss, Decca
Records and Red Bull.
Summary & Outlook
Continued positive earnings throughout the period, during which
the Company listed on AIM and the continued search for suitable
acquisition opportunities, is testament to the strength of the
entire Fuse 8 team. I would like to take this opportunity to thank
each member of our team for their contribution towards our good
performance.
The first half of the year has seen steady progress and there is
positive momentum driving the Group forward with an encouraging new
business pipeline. We believe that the second half will deliver
further very positive steps in our growth plans. Whilst other
companies are leaving AIM, I am pleased to be able to report such
strong prospects for the Company; Fuse 8 is emerging as a forward
thinking digital agency and the platform AIM provides should help
propel the Company onwards in its ambition to become one of the
UK's pre-eminent digital agencies.
Nigel Hunter
Chief Executive Officer
15 December 2010
Interim group statement of comprehensive income
for the six months ended 30 September 2010
6 months ended 6 months ended Year ended
30 September 2010 30 September 2009 31 March 2010
GBP'000 GBP'000 GBP'000
Unaudited Unaudited Unaudited
Turnover 2,407 2,063 4,512
Revenue 3 1,625 1,539 3,347
---------------------- ----------------- ----------------- -------------
Administrative
expenses 1,396 1,155 2,746
---------------------- ----------------- ----------------- -------------
Headline operating
profit 3 229 384 601
Exceptional costs 8 411 - -
Operating
(loss)/profit 3 (182) 384 601
Finance costs 10 6 17
Finance income (1) - (1)
Net finance cost 9 6 16
(Loss)/ profit from
continuing operations
before tax (191) 378 585
Taxation charge 4 54 87 180
---------------------- ----------------- ----------------- -------------
(Loss)/ profit for the
period and total
comprehensive income (245) 291 405
---------------------- ----------------- ----------------- -------------
Attributable to:
Parent company's
shareholders (245) 291 405
Basic earnings per
share from total
operations 5 (2.2p) 2.8p 4.0p
---------------------- ----------------- ----------------- -------------
Diluted earnings per
share from total
operations 5 (2.2p) 2.8p 4.0p
---------------------- ----------------- ----------------- -------------
Interim group statement of financial position
as at 30 September 2010
30 September 2010 30 September 2009 31 March 2010
GBP'000 GBP'000 GBP'000
Unaudited Unaudited Unaudited
Non-current assets
------------------------- ----------------- ----------------- -------------
Property, plant and
equipment 342 281 315
Current assets
Trade and other
receivables 1,260 1,183 1,226
Cash and cash equivalents 390 149 284
------------------------- ----------------- ----------------- -------------
1,650 1,332 1,510
------------------------- ----------------- ----------------- -------------
Total assets 1,992 1,613 1,825
------------------------- ----------------- ----------------- -------------
Current liabilities
Trade and other payables 860 714 744
Corporation tax 232 119 180
Financial liabilities 59 49 30
------------------------- ----------------- ----------------- -------------
1,151 882 954
------------------------- ----------------- ----------------- -------------
Non-current liabilities
Financial liabilities 90 77 103
Deferred tax 9 9 9
------------------------- ----------------- ----------------- -------------
99 86 112
------------------------- ----------------- ----------------- -------------
Total liabilities 1,250 968 1,066
------------------------- ----------------- ----------------- -------------
Net assets 742 645 759
------------------------- ----------------- ----------------- -------------
Shareholders' funds
Share capital 544 18 18
Share premium account 1,667 - -
Capital redemption
reserve - 2 2
Merger reserve (1,963) - -
Retained earnings 494 625 739
Total equity 742 645 759
------------------------- ----------------- ----------------- -------------
Interim group statement of change in equity
for the six months ended 30 September 2010
Share Capital
Issued premium redemption Merger Retained Total
capital account reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 April 2009 18 - 2 334 354
-------------- -------- -------- ------------ -------- --------- -------
Profit for the
financial
period - - - - 291 291
Total
comprehensive
income for
the period - - - - 291 291
-------------- -------- -------- ------------ -------- --------- -------
Balance at 30
September
2009 18 - 2 - 625 645
Profit for the
financial
period - - - - 114 114
-------------- -------- -------- ------------ -------- --------- -------
Total
comprehensive
income for
the period - - - - 114 114
-------------- -------- -------- ------------ -------- --------- -------
Balance at
31 March 2010 18 - 2 - 739 759
-------------- -------- -------- ------------ -------- --------- -------
Loss for the
financial
period - - - - (245) (245)
Total
comprehensive
income for
the period - - - - (245) (245)
Reverse
acquisition 526 1,667 (2) (1,963) - 228
Balance at 30
September
2010 544 1,667 - (1,963) 494 742
-------------- -------- -------- ------------ -------- --------- -------
Interim group statement cash flows
for the six months ended 30 September 2010
6 months ended 6 months ended Year ended
30 September 2010 30 September 2009 31 March 2010
GBP'000 GBP'000 GBP'000
Unaudited Unaudited Unaudited
Cash inflow from
operating activities
Cash inflow from
operating activities
before tax 7 51 114 364
Corporation tax paid - - (32)
---------------------- ----------------- ----------------- -------------
Net cash inflow from
operating activities
after tax 51 114 332
Cash inflow/ (outflow)
from investing
activities
Finance income
received 1 - 1
Cash acquired on
reverse acquisition 82 - -
Purchase of property,
plant and equipment (129) (128) (220)
Proceeds from
disposals of
property, plant and
equipment 69 - -
---------------------- ----------------- ----------------- -------------
Net cash inflow/
(outflow) from
investing activities 23 (128) (219)
---------------------- ----------------- ----------------- -------------
Cash inflow from
financing activities
Finance cost paid 8 (6) (17)
Hire purchase
agreements 24 73 92
Net cash inflow from
financing activities 32 67 75
---------------------- ----------------- ----------------- -------------
Net increase in cash
and cash equivalents 106 53 188
---------------------- ----------------- ----------------- -------------
Cash and cash
equivalents at
beginning of period 284 96 96
Cash and cash
equivalents at end of
period 390 149 284
---------------------- ----------------- ----------------- -------------
Notes to the interim group financial statements
for the six months ended 30 September 2010
1. GENERAL INFORMATION
Fuse 8 plc and its subsidiaries' principal activities are
digital marketing communications services.
Fuse 8 plc, a Public Limited Company, is incorporated and
domiciled in the United Kingdom.
The financial information set out in the interim report does not
constitute statutory accounts as defined in the Companies Act
2006.
The statutory financial statements for the year ended 31 March
2010 for Fuse 8 Group Limited and for the year ended 30 September
2009 for Fuse 8 plc (formerly Award International Holdings plc),
both prepared under United Kingdom General Accepted Accounting
Practices (GAAP), have been filed with the Registrar of Companies.
The auditor's report on those financial statements was unqualified
and did not contain a statement under Sections 498 (2) and (3) of
the Companies Act 2006.
The interim report was approved by the Board on 14 December
2010.
2. BASIS OF PREPARATION
The Company issued new shares in June 2010 to acquire the share
capital of Fuse 8 Group Limited (see note 8). After the acquisition
the directors of Fuse 8 Group Limited, owned the majority of Fuse 8
plc. Under International Financial Reporting Standards (IFRS), the
transaction is deemed to be a reverse acquisition. The assets and
liabilities of Fuse 8 Group Limited have been recognised and
measured at their pre-combination carrying values and the
comparative results are those of Fuse 8 Group Limited and therefore
the retained earnings and other reserves brought forward are those
of Fuse 8 Group Limited. The cost of the acquisition was measured
at the fair value of the ordinary shares that were issued to effect
the reverse acquisition. The assets and liabilities of Fuse 8 plc
have been recognised at the fair value at the acquisition date. The
premium arising on the acquisition has been written off within the
income statement. The share capital and share premium at the period
end are those of the parent company Fuse 8 plc. The movement in the
share capital and share premium from Fuse 8 Group Limited to Fuse 8
plc is recognised in a merger reserve.
This consolidated financial information for the six months ended
30 September 2010 has been prepared in accordance with IAS 34,
"Interim Financial Reporting" as adopted by the European Union. The
interim group financial statements should be read in conjunction
with the annual financial statements for the year ended 31 March
2010, for Fuse 8 Group Limited prepared in accordance with UK GAAP
and the AIM listing document dated 23 June 2010 which converted the
UK GAAP financial statements to comply with IFRS. No adjustments
were required to the numbers reported initially under UK GAAP to
comply with IFRS and as such the comparative numbers for 31 March
2010 and 30 September 2009 agree with those presented under UK
GAAP.
This interim financial information has been prepared using the
accounting policies set out in the Group's admission document to
AIM published on 23 June 2010.
Copies of the interim results for the six months ended 30
September 2010 are being sent to all shareholders. A copy can also
be found on the Company's website at www.fuse8.com.
Comparative period
The comparative period for the interim financial statements is
for the six months to 30 September 2009 and the 12 months to 31
March 2010 which was the previous year end for Fuse 8 Group
Limited. The 31 March 2010 figures are drawn from the audited
financial statements of Fuse 8 Group Limited and will be the
comparative period for the Group financial statements prepared to
31 March 2011 for the Fuse 8 plc Group. However, as those financial
statements were prepared under UK GAAP, the 31 March 2010 figures
have been described as unaudited.
The period end of Fuse 8 plc (the parent) has been extended by
six months to 31 March 2011. Due to the use of reverse acquisition
accounting prescribed under IFRS, the Group results at 31 March
2011 will represent:
- 12 month trade of Fuse 8 Group Limited (the trading
subsidiary) - Fuse 8 plc results from the date of the reverse
acquisition of 23 June 2010 to 31 March 2011.
Prior to the release of the interim financial statement for the
six months to 30 September 2010, Fuse 8 plc (when it traded as
Award International Holdings plc) released interim results for the
six months to 31 March 2010 which were included in the AIM
admission document published on 23 June 2010. The results included
in those interims to 31 March 2010 related solely to the Company's
activities as Award International Holdings plc and the results
occurred prior to the reverse acquisition. As such, the 31 March
2010 interims have not been included in these interim group
financial statements as comparative information as they have no
relevance to the newly created Group.
3. segmental analysis
The Group operates in one business segment, the provision of
digital marketing communications services. As such, no further
segmental information has been disclosed.
4. Taxation charge
The taxation charge for the period ended 30 September 2010
differs to the standard rate of tax as explained below.
6 Months ended 6 Months ended Year ended
30 September 30 September 31 March
2010 2009 2010
GBP'000 GBP'000 GBP'000
(Loss)/ profit before taxation (191) 378 585
---------------------------------- -------------- -------------- ----------
(Loss)/ profit before taxation by
rate of tax of 28% (53) 105 164
Non tax deductible acquisition
costs 115 - -
Other timing differences (8) (19) 16
Taxation charge 54 87 180
---------------------------------- -------------- -------------- ----------
5. EARNINGS PER SHARE
The calculation of the basic earnings per share is based on the
profit on ordinary activities after tax and on the weighted average
number of Ordinary shares in issue during the year.
As a result of the reverse acquisition, the weighted average
number of shares up until the reverse acquisition is deemed to be
the number of shares that were issued by Fuse 8 plc for the reverse
acquisition.
The diluted earnings per share figure is the same as the basic
earnings per share as no diluting shares or options exist.
The (loss)/ profit and weighted average number of shares used in
the calculations are set out below:
(Loss)/
Basic and diluted profit Weighted average number Earnings per share
earnings per share GBP'000 of shares Number '000 Pence
----------------------- -------- ----------------------- ------------------
6 months ended 30
September 2010 (245) 11,350 (2.2p)
6 months ended 30
September 2009 291 10,215 2.8p
Year ended months ended
31 March 2010 405 10,215 4.0p
6. Dividend
The Board of Directors does not recommend the payment of a
dividend.
7. Net cash inflow from operating activities
6 Months Year
6 Months ended ended
ended 30 September 30 September 31 March
2010 2009 2010
GBP'000 GBP'000 GBP'000
Operating (loss)/ profit (182) 384 601
Depreciation 42 39 98
Non cash element of acquisition
costs 110 - -
Profit on disposal of property,
plant and equipment (9) - -
Increase in receivables (36) (406) (448)
Decrease in payables 126 97 114
-------------------------------- ------------------ ------------- ---------
Net cash inflow from operating
activities 51 114 364
-------------------------------- ------------------ ------------- ---------
8 Reverse acquisition
On the 23 June 2010, Fuse 8 plc (formerly Award International
Holdings plc) acquired all of the issued share capital of Fuse 8
Group Limited. The transaction has been accounted for as a reverse
acquisition under International Financial Reporting Standards. The
amounts recognised for each class of assets, liabilities and
contingent liabilities recognised at the acquisition date were as
follows:
GBP'000
Trade and other receivables 41
Cash 82
-------
Trade and other payables (5)
Net assets acquired 118
Non cash fair value of shares issued 228
Acquisition fees 301
-------
529
Exceptional cost of acquisition recognised in the
income statement 411
-------------------------------------------------- -------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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