International Marketing & Sales Group Ltd
Unaudited Results for the Three Months ended 30 September 2008
Gross Profit up 93% Year on Year, generating operating cash of $2.4m
International Marketing & Sales Group Plc ("IMSG" or the "Group"), the emerging markets focused sales and marketing
company, today announces unaudited results for the nine months ended 30 September 2008.
Financial Highlights for the three months
* Turnover up 93% to US$43.8million (2007: US$22.7million)* Gross profit up 148% to US$19.8million (2007: US$8.0
million)* Underlying pre-tax profit of US$1.8 million before final US$2.5 million impairment of IMSG's holding in
Turkish agency RPM Radar "RPM" Financial Highlights for the nine months
* Turnover up 74% to US$144.5million (2007: US$83.1million)* Gross profit up 93% to US$50.4million (2007: US$26.1
million)* Net cash of US$7.8 million (US$8.3 million as at 31 December 2007)* Net cash generated from operating
activities of $2.4m Operational Highlights
* Contract won in Q3 for work connected with the Russian lottery* Encouraging performance by events business
One2Remember International* Commenced work for major new client Alrosa* New JV in trade marketing with 4P in Russia
launched in November Commenting on the results, Greg Thain, Chairman of the Group said:
"The current trading environment is very challenging but while we have inevitably seen some reductions in work from
clients, we have also secured some encouraging wins during the quarter indicating that the emerging markets are still
growing, albeit at a slower rate. Our focus now is on cash generation; we have implemented cost reduction measures
across the group to facilitate this and we are closely monitoring the contribution of each business in the Group. We
believe we are well positioned to provide sales-driven solutions to clients in emerging markets who are now looking to
market goods and services offering the best value for money."
Certain statements in this press release are forward looking statements. Forward looking statements involve
evaluating a number of risks, uncertainties or assumptions that could cause actual results to differ materially from
those expressed or implied by those statements. Forward looking statements regarding past trends, results or activities
should not be taken as a representation that such trends, results or activities will continue in the future. Undue
reliance should not be placed on forward looking statements.
Enquiries
Johanna Fagrell-Kohler Tel: +46 734 100 550
Terry Livingstone Tel: +44 (0)20 7735 6788
International Marketing & Sales Group Limited
Emily Bruning/Andrew Best
Shared Value Limited Tel: +44 (0)20 7321 5010
Mark Williams / Henry Fitzgerald-O'Conner
Canaccord Adams Limited Tel:+44 (0)20 7050 6500
Notes to Editors
* IMSG was founded in 1996 and the Group was admitted to trading on AIM on 6 December 2005.* The Group's clients include
multinational and first tier local companies operating in FMCG, telecommunications, retail trade, banking and finance,
automotive, consumer electronics and pharmaceutical industries.* IMSG currently has over 40 offices predominantly in
emerging markets: Moscow, Saint Petersburg, Yekaterinburg, Kazan, Nizhniy Novgorod, Novosibirsk, Rostov-on-Don, Samara,
Krasnodar (Russia), Kiev (Ukraine), Almaty, Astana (Kazakhstan), Dushanbe (Tajikistan), Tashkent (Uzbekistan), Erevan
(Armenia), Belgrade (Serbia) Istanbul (Turkey), New Delhi, Mumbai, Bangalore, Chennai, Kolkata, Hyderabad (India), Kuala
Lumpur (Malaysia), Dubai (UAE), Doha (Qatar), Budapest (Hungary), Bucharest (Romania), Athens (Greece), Sofia (Bulgaria)
London (UK), Stockholm, Malmo (Sweden) and Barcelona (Spain).* Further information about the Group is available on its
website at: http://www.imsg.co.uk Chairman's Statement
Since the Group reported half-year results at the end of August, the macro economic environment has worsened and
trading conditions in our markets have got tougher, with some clients inevitably reducing their sales and marketing
budgets and some with committed contracts cancelling work. Despite the challenging environment in which we are
operating, we achieved some encouraging client wins during the quarter, most notably Alrosa and the Russian lottery. In
addition, the market conditions have provided us with the opportunity to increase our level of work for a number of
clients who have looked to reduce their own permanent staff to an outsourced field force that provides them with the
leverage to move quickly with market conditions. In November we launched a new trade marketing business in Russia, "The
KAM Co", a joint venture with 4P Group, which will use the know-how and other resources of both companies to carry out
shared merchandising projects.
However as a result of the consequences of the uncertain economic climate outline above, the outcome for the year is
likely to be below previous expectations. The Group is responding to market conditions by focusing on cash generation. A
headcount reduction programme is in process in which staff numbers in Russia will be reduced from 390 to 300 by early
next year and the salary structure across the Group is being changed so that we can achieve a ratio of 70% fixed to 30%
performance linked salaries, with performance being measured against specific KPIs and achievement of profit targets.
Development projects, especially internet related ones, have also been cancelled as part of our cost reduction
programme.
Turnover for the third quarter was US$43.8m with gross profit of US$19.8m. The majority of currencies in the markets
in which we operate have depreciated against the US dollar, and our results are therefore negatively impacted by the
translation effect.
In the first half of the year we developed our retail offering by leveraging the expertise of Pragma into existing
markets and we have seen good operational results from this division in the third quarter.
Our events business, One2Remember International, is growing strongly and the team recently organised a major event
for Alrosa in Singapore. In the first half of the year, One2Remember was established as an international offering and we
have client contracts covering a number of territories. Given the seasonal nature of the events business, we expect
continued strong performance from One2Remember in the fourth quarter.
Our strategy is to continue to focus on sales driven marketing in emerging markets where we are seeing FMCG
companies in particular respond to the current macro environment by focusing on the goods that offer the best value for
money. IMSG has the platform from which to serve multinational clients in 18 countries and we plan to capitalise on this
opportunity to provide them with sales-focused marketing programmes. Our spread of services means we are able to deliver
immediate sales results for our clients through sales promotion, events and direct and trade marketing. We remain the
only marketing group that has a focus on the emerging markets.
We believe that we have the resources to survive through the recession and to be well placed when the eventual
upturn materialises. The Board is currently renegotiating the Group's forward commitments, to enable new investment to
be sought once market conditions stabilise.
The Board is focused on enhancing shareholder value and, as well as focusing operational efforts to this end, is
continually reviewing strategic opportunities to achieve this.
Greg Thain
Executive Chairman, IMSG
Statements of IMSG Managing Directors
Russia
Mark Huntley, Chairman of IMSG Russia Management Board
During this recent period we have made significant progress against the key tasks we had defined during Q2, namely
ensuring we stabilised our existing clients and forming the basis of new, enhanced service products in focussed areas of
marketing.
Whilst economies and markets have been turbulent during the past months, I am confident that these new offerings in
Trade & Consumer Marketing remain highly relevant and meaningful for our valued existing clients and indeed new ones.
I am also pleased to announce that we have a General Manager for IMSG Kazakhstan. Halim Tansug, started in
September, having worked in the market previously he has hit the ground running with business introductions to many
multi-national clients seeking to invest further in their expansion in the market.
Organic growth with our existing business has remained healthy with some significant additions to existing
contracted projects this year and forecast for next year too with clients such as P&G, Nokia and Alrosa.
This third quarter has also witnessed our Events division - One 2 Remember stage its first stand-alone music tour
featuring Dmitry Bilan, Serbia's Eurovision song contest winner. Dmitry's tour of the key Russian cities of Kazan,
Nizhniy Novgorod, Omsk, Perm, Ekaterinburg and Novosibirsk, sponsored by Oriflame, was managed, promoted and marketed by
IMSG companies.
We are witnessing continued strong demand and significant sales growth in outsourcing services such as payroll and
trade marketing services in Q3, with a new client programme being contracted for Philips.
Turkey, Romania and Hungary
Michael Green, Managing Director, IMSG International
Turkey
Our trade marketing agency, MAPP, and our experiential agency, Elektrik are performing well in a tough environment.
Wins with Samsung, TurkCell and Tesco have contributed to this success. Elektrik has also started working with Beeline,
a Russian group client.
Romania
IMSG Bucharest, our local marketing communications group has performed adequately in the first 9 months. The core
advertising, events & production businesses are performing ahead of target, compensating for the drop off in media
margins. IMSG-Bucharest has successfully started a retail division with group client, Metro.
BIP, our trade marketing agency is well positioned in a market which is increasingly looking to outsource its sales
& merchandising operations. Our PR group, V+O Romania has been successfully launched. Major clients for the group in
Romania include Canon, European Drinks, Unilever, Metro, Colgate, Kraft, Philip Morris, Cosmote, QLD, Coca Cola.
Hungary
HPS has performed well in a flat economy and the performance of HPS Experience, our experiential agency has been a
highlight. The marketing and sales group continues to add new clients to its portfolio, including T-Mobile. Major HPS
clients include BAT, Zwack, Danone, Samsung, Tesco, Pfizer & Pepsi. HPS has recently won a Golden Effie award for its
work with Friesland.
Greece
V+O, IMSG's PR Group with offices in Greece, Bulgaria, Romania and Serbia has performed well in the first nine
months, though has been under pressure in the Greek market with budget reductions from Deutsche Telekom, RTL & Emporiki
Bank. V+O's reputation in the region is exceptional and PR will remain a core and valuable offer to clients in the
current market conditions. V+O clients include Coca Cola, Deutsche Telekom, Emporiki Bank, Cosmote, Bayer.
Our Greek events agency EY ZHN is performing strongly with new business from Oriflame, Comote, Microsoft and
Beeline.
Specialist Service Areas
Adrian Stewart, Managing Director, Specialist Service Area Development, IMSG International
The first nine months of 2008 saw further development of the IMS Retail service offering across the IMSG global
network on the back of key strategic relationships with two of the world's biggest retail chains: Metro CC and Tesco.
Russia
IMS Retail Russia continued to exceed budget expectations and we are forecasting this business unit to finish 2008
15% above its PBT target making it the most profitable single business unit within IMSG. This growth is being driven by
the ongoing consolidation of our long term multi-service relationship with Metro CC and the expansion of our
merchandising activity with the X5 Group (chains: Perekristok and Pyaterochka).
Ukraine
IMS Retail Ukraine was launched in Q3 2008 when we provided the store opening event for the major German DIY chain
OBI.
Romania
IMS Retail Romania continued to further develop its relationship with Metro CC. We are now working with this chain
across multiple service areas. This relationship has provided the fledging business unit with a foundation from which to
develop new business.
Turkey
IMS Retail Turkey continued to expand local operations with Tesco-Kipa. The pilot activity on non food sales
consultancy has been a resounding success, resulting in further roll out of the project in 2009. Again the success of
this initial client for the Retail business unit in Turkey is laying the foundation for the development of further
client relationships.
Hungary
IMS Retail Hungary has expanded its cooperation with Tesco on the back of a highly successful pilot project.and we
are very confident that 2009 will reflect the strengthening of our partnership with Tesco's.
Away from Retail, significant steps forward have been taken with the development of other specialist service areas
within the IMSG network. The Experiential and Events business has won several key contracts across multiple markets.
This group benefit of leveraging client contacts and service offerings across regional and local group businesses
has started to build real momentum with network coordination across major new business development opportunities in
multiple markets. We are now seen and invited to participate in multi-disciplinary Pan European work which highlights
the market recognition of our abilities to deliver quality services across the region and is one which we are proud of
having achieved.
General Information
These unaudited interim accounts have been approved for issue by the Board of Directors on 27 November 2008.
Certain statements in this press release are forward looking statements. Forward looking statements involve
evaluating a number of risks, uncertainties or assumptions that could cause actual results to differ materially from
those expressed or implied by those statements. Forward looking statements regarding past trends, results or activities
should not be taken as a representation that such trends, results or activities will continue in the future. Undue
reliance should not be placed on forward looking statements.
International Marketing & Sales Group Plc
Consolidated Income Statement
Yearto 30 Yearto 30 Year to
Sept Sept 30June
In thousands of US Dollars 2008 2007 2008
Continuing operations:
Revenue 144 521 83 112 100 746
Cost of sales 94 075 57 021 70 061
Gross profit 50 446 26 091 30 685
Other operating income (287) (416) (1 134)
General and administrative expenses 51 009 29 110 33 844
Other operating expenses 9 243 - 7 251
Operating profit (9 520) (2 604) (9 276)
Finance income 366 730 485
Finance costs 1 888 215 2 116
Share of result of associates
Profit/(loss) before income tax (11 042) (2 089) (10 907)
Income tax expense 1 170 107 575
Profit/(loss) for the year (12 212) (2 196) (11 482)
Profit/(loss) is attributable to:
Equity holders of the Company (12 769) (2 393) (11,604)
Minority interest 584 89 122
Profit/(loss) for the year (12 212) (2 304) (11,482)
Earnings per share:
Basic (14.66) pence (3.01) pence (12.39) pence
Diluted (14.45) pence (2.96) pence (12.20) pence
International Marketing & Sales Group Plc
Consolidated Balance Sheet
Nine Months Nine Months Six Months
30 Sept 30 Sept 30 June
2008 2007 2008
US$'000 US$'000 US$'000
Non-Current Assets
Property, plant and equipment 5 300 3 118 6 042
Investment property - -
Goodwill 89 334 52 462 89 614
Other intangible assets 2 181 4 212 2 829
Investments 168 21 167
Deferred income tax asset 1 530 830 1 883
Other non-current assets 793 6 428
Total Non-Current Assets 99 306 60 648 100 963
Current Assets
Inventories 1 732 890 2 108
Trade and other receivables 59 296 40 507 73 318
Current income tax prepayment 2 216 85 1 813
Investments 735 1323 1 141
Cash and cash equivalents 7 827 20 170 10 983
Total Current Assets 71 805 62 974 89 363
Total assets 171 111 123 623 190 326
Equity
Share capital 633 542 640
Retained earnings 2 120 2 909 2 867
Other reserves 77 026 63 468 76 999
Equity attributable to the Company's equity holders 79 780 66 920 80 506
Minority Interest 3 234 1 595 3 896
Total Equity 83 014 68 515 84 402
Liabilities
Non-Current Liabilities
Borrowings 662 3 241 873
Deferred income tax liability 1 402 756 1 353
Trade and other payables 21 158 2 550 27 152
Provisions 81 - 420
Total Non-Current Liabilities 23 304 16 547 29 798
Current Liabilities
Borrowings 19 013 4 168 17 242
Trade and other payables 39 949 30 462 51 708
Current income tax payable 1 526 1 118 2 127
Other taxes payable 3 936 2 800 4 844
Other provisions for liabilities and charges 368 13 205
Total Current Liabilities 64 793 38 561 76 126
Total liabilities 88 097 55 108 105 924
Total liabilities and equity 171 111 123 623 190 326
International Marketing & Sales Group Plc
Notes to the interim accounts for the period ended 30 September 2008
Basis of preparation
The condensed Group financial statements for the nine months ended 30 JSeptember 2008 included in this report have
been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The condensed
Group financial statements should be read in conjunction with the annual financial statements for the year ended 31
December 2007, which were prepared in accordance with IFRS as adopted by the European Union.
The condensed Group financial statements have been reviewed, not audited, and were approved by the Board on 28
August 2008. The full year figures for 2007 included in this report do not constitute statutory accounts for the purpose
of Section 104 of the Companies (Jersey) Law 1991. A copy of the Company's statutory accounts is available on
www.imsg.co.uk. The independent auditors' report on those accounts was unqualified and did not contain any statement
under Section 111(2) or (5) of the Companies (Jersey) Law 1991.
The condensed Group financial statements have been prepared on the basis of the accounting policies set out in the
annual financial statements for the year ended 31 December 2007.
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