27th Mar 2008 07:02
M&C Saatchi PLC27 March 2008 M&C SAATCHI PLC PRELIMINARY STATEMENT FOR YEAR ENDED 31 DECEMBER 2007 GROUP HIGHLIGHTS • Revenues up 15.5% to £87.6m (2006: £75.9m) • Headline profit before tax up 53.2% to £11.9m (2006: £7.8m) • Headline profit after tax up 66.6% to £8.2m (2006: £4.9m) • Headline basic EPS up 78.3% to 12.55p (2006: 7.04p) • Proposed full year dividend up 13.1% to 3.62p (2006: 3.20p) The headline results referred to above are stated before taking account itemsexcluded from the statutory results. A summary reconciliation of the statutory to headline results is presented on page 2. Commenting on the results, David Kershaw, Chief Executive, said "2007 was a very successful year for the Group in terms of revenue, profit andexecuting our strategy for growth. The core business has continued to thrive andwe have made significant investments in higher growth, higher margin sectors. We have made a good start to the year and the outlook for the rest of the yearremains in line with current expectations." For further information please call: M&C Saatchi plc 020 7543 4500David Kershaw, Chief Executive Tulchan Communications 020 7353 4200Celia Gordon Shute Numis SecuritiesCharles Farquhar 020 7260 1233Lee Aston 020 7260 1200 M&C SAATCHI PLCSUMMARY OF RESULTS INTRODUCTION The reported statutory results for 2007 reflect the impact of the accountingchanges to which the Group has been subject as a result of adopting andreporting IFRS (International Financial Reporting Standards) for the first time.The board considers that these changes do not affect the underlying operatingperformance or the cash flows of the Group. Therefore, and in common with ourpeers, we have excluded those accounting charges which have materially alteredthe results. Those accounting charges are: •The amortisation of intangible assets under IAS 36. •The revaluation of minority shareholder put options under IAS 32 & IAS 39. •The fair value adjustment to deferred consideration (notional interest) under IFRS 3 & IAS 39 This commentary reports on the financial results for the Group excluding theimpact of these accounting charges. A reconciliation of the statutory to headline operating results is presentedbelow: 2007 2006 £000 £000 ------- ------- Headline operating profit 10,222 6,274Headline profit before taxation 11,926 7,786 Less items excluded from headline results Amortisation of intangible assets - Group company 608 20 Amortisation of intangible assets - associate 53 - Fair value adjustment of minority put options liabilities 3,052 8,970 Notional interest 257 - ------- -------Statutory profit before taxation 7,956 (1,204) ------- ------- M&C SAATCHI PLCSUMMARY OF RESULTS These results show a very strong performance for 2007. Revenues increased by15.5% to £87.6m (2006: £75.9m). Headline operating profits increased by 62.9% to£10.2m (2006: £6.3m) and the headline profit before tax increased by 53.2% to£11.9m (2006: £7.8m). The headline basic EPS increased 78.3% to 12.55p (2006:7.04p). This encouraging level of growth reflects a combination of strong organic growthas well as the contributions from the acquisitions in the UK, Germany and Spain. Our investment, expanding the business into continental Europe, which had anegative impact on earnings in 2005 and 2006 is now making an importantcontribution to profits. The contribution has come from a combination of theorganic start up in Paris in 2005 (which is reporting its first full yearprofit), the acquisition made in Germany in July 2006, and from the initial 25%investment in our Spanish associate in March 2007. Additionally, our previously loss making operations in the US have moved intoprofit. In 2007 we made important steps in executing our strategy of moving the Groupinto higher margin disciplines, with the acquisition of Clear Ideas Ltd (Clear).We also acquired a further 19.5% of Walker Media. Both transactions took placein July. M&C SAATCHI PLCFINANCIAL REVIEW REVENUE Revenue increased 15.5% in the year. Like-for-like revenue growth (excluding theimpact of acquisitions and reported at constant exchange rates) was 7.4%. Inc / Dec 2007 2006 Reported Constant £000 £000 rates rates -------- ------- -------- --------Organic UK 48,284 44,352 8.9% 8.9% Asia & Australia 24,663 25,638 (3.8)% (4.6)% America 3,732 3,632 2.8% 11.5% Europe 4,235 1,800 135.3% 134.5%Acquired Clear 5,454 - - - Germany 1,252 471 - - -------- ------- -------- -------- Total Revenue 87,620 75,893 15.5% 15.6% -------- ------- -------- -------- The organic revenue growth in the UK was driven by the continued growth ofWalker Media and in particular its digital activities. The balance of thebusiness had a solid year and is in good shape to deliver the growth expected in2008. Clear was acquired in July and contributed £5.5m of new revenues from itsoperations in the UK (£4.5m), Europe (£0.6m) and America (£0.5m). The picture in the Asia Pacific region was mixed. The loss of the IAG account atthe end of 2006 in Australia was a setback and the most significant factoraffecting the revenue decline for the region. There were positive performancesfrom the offices in India, New Zealand and particularly Malaysia. The offices inSingapore and Thailand did not perform well. In May 2007 we reorganised our business in America. We shifted the focus of ouradvertising activities to LA and ceased work on accounts that needed servicingin New York. The LA office had an excellent year with revenue up 34.7% atconstant rates on the back of account wins in 2006. The impact of resigning theNew York business reduced the overall revenue growth 11.5% at constant rates. 2007 was a very good year for our European business. Our Paris office continuesits excellent progress winning the Pages Jaunes account. Together with thecontribution from the Berlin office and our Spanish associate (accounted forunder associates so no contribution to revenue) the contribution from ourexpansion into continental Europe has been significant. OPERATING PROFIT 2007 2006 Inc/Dec £000 £000 £000 % -------- -------- -------- ------- UK 8,369 6,323 2,046 32.4%Asia Pacific 550 1,496 (946) (63.2)%USA 581 (261) 842 -Europe 722 (1,284) 2,006 - -------- -------- -------- -------Group Total 10,222 6,274 3,948 62.9% -------- -------- -------- ------- The headline operating profit increased 62.9% to £10.2m (2006: £6.3m). Theheadline operating margin increased to 11.7% (2006: 8.3%). The key drivers of profit growth were the strong performance in the UK and thesignificant improvements from a loss in 2006 to a profit in 2007 by the USA andEuropean businesses. Our Asia Pacific business had a disappointing first halffollowing the loss of the IAG business in Australia at the end of 2006. Tradingimproved in the region in the second half, as Australia won significant businessfrom Westfield and Abu Dhabi Tourism. ASSOCIATES The Group's share of headline profit after tax (excluding the amortisation ofintangibles) from its associates increased to £334k (2006: £5k). In March 2007we acquired an initial 25% of Spanish agency group Zapping/M&C Saatchi. Thecontribution from Zapping for the 9 month period was £309k. The balance of £25kis from our UK based digital business Play London Ltd. NET INTEREST The headline net interest contribution (after excluding the notional interest of£0.3m, on the estimated deferred consideration and the fair value adjustment tominority shareholder put option liabilities of £3.2m) declined to £1.4m (2006:£1.5m). The Group earned £1.8m (2006: £1.5m) on the positive operating cashflows and paid £0.4m (2006: £Nil) on the Group's borrowings which stood at £8.6mat 31 December 2007. HEADLINE TAX RATE The Group's headline tax rate reduced to 31.1% (2006: 36.7%). The reduction isdue to the significant reduction in the unutilised losses that was incurred inNew York, Asia and France in 2006. We expect the tax rate to stabilise around30% to 31% based on the current operating mix. MINORITY INTERESTS The profit after taxation attributable to the Group's minority shareholdersincreased marginally to £1.2m (2006: £1.1m). More significantly the proportionof the headline profit after taxation attributable to the minority shareholdersdecreased to 14.2% (2006: 23.3%). This was due to the acquisition of 19.5% ofthe remaining 25% minority in Walker Media in July and to the significantreduction in the operating losses incurred in the USA, Europe and parts of AsiaPacific, all of which are attributable to the Group's equity shareholders. CASH FLOW AND GROUP DEBT In 2007 the headline profit before tax before associates was £11.6m and theprovision for depreciation and the share based incentive plans was £2.0m. Thetax paid in the period was £4.1m and the amount spent on capital expenditure,excluding acquisitions, was £1.5m. There was a reduction in the positivecontribution to working capital of £3.2m and the dividends paid to the Group'sequity and minority shareholders was £3.2m. The net cash inflow was £1.5m. The net cash consumed by the Group's acquisitions was £24.6m and this was fundedfrom a combination of existing Group cash reserves and facilities provided byRBS. The maximum facility available from RBS is £13m of which £8.6m was beingutilised at the 31 December 2007. DIVIDEND The board is proposing a final dividend of 2.75 pence per share (2006: 2.43pence), giving a full year dividend of 3.62 pence (2006: 3.20 pence), and anincrease of 13.1%. The dividend will be paid on the 7 July 2008 to shareholderson the register as at the 6 June 2008. OPERATING REVIEW STRATEGY At the time of the float in July 2004 we set out our ambitions to grow M&CSaatchi into a global network, extending our marketing services into highermargin and higher growth disciplines and extending our geographic reach intocontinental Europe. This year has been a very important one in realising thesegoals. We now have a strong network across the world. This year, our business inContinental Europe has exited from the investment phase and has made a profitcontribution to the Group. Our US business is now stabilised, contributing aprofit from a previously loss making position. Asia and Australia have had atough first half, but ended the year well following some important clients wins. 2007 was a very important year in consolidating the Group's move into attractivegrowth markets and higher margin categories. We purchased a further 19.5% ofWalker Media which takes our ownership to 94.5% and further strengthens ourposition in this profitable marketplace. Additionally, we acquired Clear in thefirst half of the year, which takes us into the growing brand consultancy marketin the UK, Europe and America. M&C SAATCHI PLCREVIEW BY REGION THE UK It was a very encouraging year for our UK businesses with revenues up by 18.9%to £52.8m (2006: £44.4m), incorporating organic growth of 8.9%. The operatingprofit increased 32.4% to £8.4m (2006: £6.3m). The operating margin increased to15.9% (2006: 14.3%). Clear made a contribution to revenue of £4.5m in the UK. 2007 was a second successive year of strong growth for Walker Media coming fromboth traditional media assignments and from the digital arm Walker-i. Thebalance of the business in the UK had a solid year. There were important winsfrom Vodafone and Findus by LIDA (our direct and digital business), newadvertising assignments from Ladbrokes and GlaxoSmithKline (Macleans). A new andgrowing stream of business this year has been assignments from clients based inthe Middle East but handled out of the UK. In July we acquired brand consultancy group, Clear. Clear's offering includesbrand strategy, growth mapping, innovation and training and engagement. Theaddition of the business to the Group is consistent with our strategy to moveinto higher margin and more profitable areas of the marketing services arena.Additionally, early indications suggest that there will be numerousopportunities to refer clients to and from the Clear business within thenetwork. In July last year Christine Walker who founded Walker Media with Phil Georgiadisin 1997 chose to retire and step down as Chairman of the business. At this pointthe Group acquired her remaining minority shareholding in Walker Media. PhilGeorgiadis also chose to sell half of the equity he owned. M&C Saatchi now holds94.5% of the equity of Walker Media. Phil Georgiadis has advised the companythat he will exercise his put option over his remaining shares, ahead of thechanges to CGT rules on 5 April. The consideration will be approximately £4.8mof which 80% will be paid in cash and remaining 20% settled by the issue of newplc shares. Phil Georgiadis has taken over as Chairman and the business remains in excellentshape. EUROPE After two years of significant investment our European businesses have madepositive contributions to Group profits. The businesses delivered revenues of£6.1m (2006: £2.3m) and an operating profit of £0.7m (2006: £(1.3)m), with anoperating margin of 11.9% (2006: (5.7)%). Our French office which opened in 2006 continues its excellent progress withvery significant new business wins from Pages Jaunes and Jameson (PernodRichard). They have also extended their offering with a move into Corporate PR. 2007 is the first full year which includes a contribution from our Germanbusiness, based in Berlin, with important client wins from Coca Cola(Apollinaris Water) and the Green Party of Germany. In March we extended our European reach into Spain following the acquisition ofan initial 25% of Madrid based agency, Zapping. We will acquire a further 26% in2008 and a final 24% in 2009. The acquisition of Clear gives the Group a presence in Amsterdam. The office wasopened 2005 and contributed £0.6m of revenues in the second half. ASIA AND AUSTRALIA Performance in the Asia Pac region was mixed, the first half was disappointingfollowed by a more stable second half (and the retention and win of someimportant clients for the region). Revenue was down by 3.8% and operatingprofits were down to £0.6m (2006: £1.5m). The operating margin declined to 2.2%(2006: 5.8%). Australia is the biggest market in the region with 63% of the revenue share. Ithas been one of our most dynamic markets over the last 13 years; the office hasconsistently won significant accounts and has award winning creativecredentials. As previously reported the business lost a critical client, IAG atthe end of 2006. Following this disappointment, the business won significant newbusiness from Westfield and from Abu Dhabi Tourism, which provides encouragementfor the current year. The office has been very successful at retaining andgrowing business from other important clients, particularly Optus and we believethey begin 2008 in good shape with a focus on new business and improving theoperating margin. The Asian businesses are now being managed by new regional CEO, Chris Jaqueshired in December 2007 and as a result, our strategy has been under review. Weare working to build on the good regional performers such as Hong Kong, Indiaand Malaysia while developing new approaches in the other key markets. AMERICA In May 2007 we reorganised our business in America and now our advertisingactivities are now based in LA. Our other marketing service activities in theregion are based in New York which includes Clear. We incurred reorganisationcosts of £0.3m. The Clear office was opened 2007 and is ahead of budget, revenuewere £0.4m from July. Our refocused business in LA had an excellent year with revenues up by 34% (atconstant rates). The operating profit for the region increased by £0.9m to £0.6m(2006: £(0.3)m) and the operating margin increased to 14.1% (2006: (7.2)% ). Inthe fourth quarter we observed trading conditions soften, and a tightening offees with a resulting negative impact on revenues. While the year ended well,full year operating profits fell below our own expectations. OUTLOOK The prospects for our UK business are good, particularly in the higher marginareas such as Clear and Walker Media. Our UK based advertising and marketingservices business is also performing well in a very competitive market havingrisen to third in the Campaign ranking for 2007. We expect our Europeanbusinesses to progress, as they continue to move out of investment phase.Conditions look more challenging in America as the economic sentiment continuesto weaken. The early signs in Australia are positive and we have plans underwayto strengthen the Asian business. Overall 2008 has started well and the outlook for the full year remains in linewith current expectations. M&C SAATCHI PLCUNAUDITED STATUTORY CONSOLIDATED INCOME STATEMENT 2007 2006Year ended 31 December Note £000 £000 Billings 412,746 368,645---------------------------------- ----- -------- --------Revenue 3 87,620 75,893---------------------------------- ----- -------- -------- Operating costs 4 (78,006) (69,639)---------------------------------- ----- -------- --------Operating profit 2,3 9,614 6,254---------------------------------- ----- -------- -------- Share of results of associates 5 281 5Finance income 6 1,809 1,540Finance costs 7 (3,748) (9,003)---------------------------------- ----- -------- --------Profit / (loss) before taxation 2,3 7,956 (1,204)---------------------------------- ----- -------- -------- Taxation on profit / (loss) 8 (3,530) (2,857)---------------------------------- ----- -------- --------Profit / (loss) for the year 4,426 (4,061)---------------------------------- ----- -------- -------- Attributable to:Equity shareholders of the Group 2 3,258 (5,209)Minority interests 1,168 1,148---------------------------------- ----- -------- --------Profit / (loss) for the year 4,426 (4,061)---------------------------------- ----- -------- -------- Earnings per shareBasic 2 5.80p (9.70)pDiluted 2 5.59p (9.70)p Headline results Headline operating profit 2 10,222 6,274Headline profit before tax 2 11,926 7,786Headline profit after tax attributable to equityshareholders 2 7,046 3,781 M&C SAATCHI PLCUNAUDITED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Year ended 31 December 2007 2006 £000 £000 Profit for the year 4,426 (4,061)Currency translation differences 828 (410)Tax effect on gains and losses recognised directly inequity (145) -Gains from exercising put options in minority 8,353 -interests---------------------------------- -------- -------- Total recognised income and expenses for the year 13,462 (4,471)---------------------------------- -------- -------- Attributable to:Equity shareholders of the Company 12,294 (5,619)Minority interests 1,168 1,148---------------------------------- -------- -------- 13,462 (4,471)---------------------------------- -------- -------- M&C SAATCHI PLCUNAUDITED CONSOLIDATED BALANCE SHEETAt 31 December Notes 2007 2006 £000 £000Non current assetsIntangible assets 61,409 15,357Investments in associates 10 4,086 -Plant & equipment 3,954 3,531Deferred tax assets 2,034 1,676Other non current assets 565 460---------------------------------- ----- -------- -------- 72,048 21,024---------------------------------- ----- -------- -------- Current assetsTrade and other receivables 74,872 48,321Current tax assets 519 88Cash and cash equivalents 16,895 31,284---------------------------------- ----- -------- -------- 92,286 79,693---------------------------------- ----- -------- -------- Current liabilitiesTrade and other payables (86,850) (66,510)Current tax liabilities (1,610) (1,036)Other financial liabilities (18) (34)Deferred and contingent consideration 11 (9,811) (67)Minority shareholder put option liabilities (6,854) (11,077)---------------------------------- ----- -------- -------- (105,143) (78,724)---------------------------------- ----- -------- -------- Net current (liabilities) / assets (12,857) 969 Total assets less current liabilities 59,191 21,993 Non current liabilitiesDeferred tax liabilities (1,604) (141)Other financial liabilities (8,531) (29)Deferred and contingent consideration (8,325) -Minority shareholder put option liabilities (3,691) (11,211)Other non current liabilities (1,142) (862)---------------------------------- ----- -------- -------- (23,293) (12,243)---------------------------------- ----- -------- -------- Total net assets 35,898 9,750================================== ===== ======== ======== EquityEquity attributable to shareholders of the parentShare capital 12 597 542Share premium 12 12,758 9,618Merger reserve 12 20,285 14,756Treasury reserve 12 (792) (792)Minority interest put option reserve 12 (6,876) (13,318)Foreign exchange reserve 12 318 (371)Retained earnings / (loss) 12 9,053 (1,261)---------------------------------- ----- -------- -------- 35,343 9,174---------------------------------- ----- -------- -------- Minority interests 12 555 576---------------------------------- ----- -------- --------Total equity 35,898 9,750================================== ===== ======== ======== UNAUDITED CONSOLIDATED CASH FLOWYear ended 31 December Notes 2007 2006 £000 £000 Cash generated from operations 13 8,991 18,716Tax paid (4,092) (3,408)---------------------------------- ----- -------- --------Net cash flow from operating activities 4,899 15,308---------------------------------- ----- -------- -------- Cash generated from investing activitiesAcquisitions 14 (24,602) (635)Proceeds from sale of plant and equipment 23 16Purchase of plant and equipment (1,401) (1,707)Purchase of capitalised software (107) ----------------------------------- ----- -------- --------Net cash from investing activities (26,087) (2,326)---------------------------------- ----- -------- -------- Cash generated from financing activitiesDividends paid to equity holders of the company (1,813) (1,377)Minority dividend paid (1,404) (1,004)Purchase of own shares - (792)Repayment of finance leases (39) (108)Inception of bank loans 13,000 -Repayment of bank loans (4,514) -Interest paid (437) (20)Interest earned from trading entities 1,553 1,085Interest received on centrally held cash 256 455Interest on finance leases (2) (13)---------------------------------- ----- -------- --------Net cash from financing activities 6,600 (1,774)---------------------------------- ----- -------- -------- Net (decrease) / increase in cash and cash (14,588) 11,208equivalents ---------------------------------- ----- -------- -------- Cash and cash equivalents at the beginning of the 31,284 20,457period Effect of exchange rate changes 199 (381)---------------------------------- ----- -------- --------Cash and cash equivalents at the end of the period 16,895 31,284---------------------------------- ----- -------- -------- M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENTNotes 1. Basis of preparation The Company is a public limited company incorporated and domiciled in the UK.The address of its registered office is 36 Golden Square, London W1F 9EE. The Company has its primary listing on the AiM market of the London StockExchange. The 2007 preliminary financial statements were approved for issue on 26 March2008. The financial information included in this report does not constitute statutoryaccounts as defined in section 240 of the Companies Act 1985, and is unaudited.The comparative figures for the year ended 31 December 2006 do not constitutethe Group's statutory accounts for that financial year. Those accounts, whichwere prepared under UK GAAP, have been reported on by the Company's auditors anddelivered to the Registrar of Companies. The auditor's report on those statutoryaccounts was unqualified, did not include references to any matters to which theauditors drew attention by way of emphasis without qualifying their report, anddid not contain a statement under section 237(2) or (3) of the Companies Act1985. The unaudited financial information presented in this document has been preparedin accordance with International Financial Reporting Standards (IFRS) adopted bythe European Union and therefore the Group financial statements comply withArticle 4 of the EU IAS Regulation. As this report is the Group's first IFRS report IFRS 1, First-time Adoption ofInternational Financial Reporting Standards, has been applied. The financialstatements should be read in conjunction with the Group's statement on theimpact of IFRS on financial statements, which was published on 21 September2007, along with note 16 which shows an explanation of how the transition to IFRS has affected the reported financial position, financial performance andcash flows of the Group. This Statement includes reconciliations of equity andprofit or loss for comparative periods reported under UK GAAP to those reported for those periods under IFRS. The Group has adopted all of the standards and interpretations that weremandatory for accounting periods beginning on or after 1 January 2007 that arerelevant to the operations of the Group. Headline results The directors believe that the headline results and headline earnings per shareprovide additional useful information on the underlying performance trends ofbusiness to shareholders. In addition the headline result is used for internalperformance management and the calculation of rewards in the Group's Long TermIncentive Plan (LTIP) scheme. The term headline is not a defined term in IFRS. The items that are excluded from headline results are the fair value gains andlosses on liabilities caused by our put option agreements, amortisation ofintangible assets created in business combinations and charges as a result ofgoodwill impairment. Accounting Policies The accounting policies adopted are consistent with those set out in thestatement on the impact of IFRS on financial statements issued on 21 September2007. M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENTNotes - Continued 2. HEADLINE RESULTS AND EARNINGS PER SHARE The analysis below provides a reconciliation between the Group's statutoryresults and the headline results with the associated earnings per sharecalculations. Basic and diluted earnings per share is calculated by dividing profitattributable to equity holders of the Group by the average number of shares inissue during the year. Year ended 31 December 2007 Reported Amortisation of Fair value Notional Headline results acquired adjustments to interest on results intangibles minority put deferred option consideration liabilities £000 £000 £000 £000 £000---------------- -------- --------- -------- --------- ----------Revenue 87,620 - - - 87,620---------------- -------- --------- -------- --------- ---------- Operatingprofit 9,614 608 - - 10,222---------------- -------- --------- -------- --------- ----------Share of results ofassociates 281 53 - - 334Net interest (1,939) - 3,052 257 1,370---------------- -------- --------- -------- --------- ----------Profit beforetaxation 7,956 661 3,052 257 11,926---------------- -------- --------- -------- --------- ----------Taxation (3,530) (182) - - (3,712)---------------- -------- --------- -------- --------- ----------Profit aftertaxation 4,426 479 3,052 257 8,214---------------- -------- --------- -------- --------- ----------Minorityinterests 1,168 - - - 1,168---------------- -------- --------- -------- --------- ----------Profit attributableto equity shareholdersof the Group 3,258 479 3,052 257 7,046---------------- -------- --------- -------- --------- ---------- EARNINGS PER SHARE Basic earnings per shareWeighted average numberof shares (thousands) 56,163 56,163---------------- -------- --------- -------- --------- ----------BASIC EARNINGS PERSHARE 5.80p 12.55p---------------- -------- --------- -------- --------- ---------- Diluted earnings per share Weighted average numberof shares (thousands) as above 56,163 56,163Add - Sharesave options 159 159 - Options 411 411 - LTIP Options 975 975 - Contingent consideration 595 595---------------- -------- --------- -------- --------- ----------Total 58,303 58,303---------------- -------- --------- -------- --------- ---------- DILUTED EARNINGS PERSHARE 5.59p 12.09p---------------- -------- --------- -------- --------- ---------- M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENTNotes - Continued 2. HEADLINE RESULTS AND EARNINGS PER SHARE (continued) Year ended 31 December 2006 Reported Amortisation of Fair value Headline results acquired adjustments to results intangibles minority put option liabilities Note £000 £000 £000 £000---------------- ----- -------- --------- -------- ----------Revenue 75,893 - - 75,893---------------- ----- -------- --------- -------- ---------- Operatingprofit 6,254 20 - 6,274---------------- ----- -------- --------- -------- ----------Share of results ofassociates 5 - - 5Net interest (7,463) - 8,970 1,507---------------- ----- -------- --------- -------- ----------Profit before taxation (1,204) 20 8,970 7,786---------------- ----- -------- --------- -------- ----------Taxation (2,857) - - (2,857)---------------- ----- -------- --------- -------- ----------Profit after taxation (4,061) 20 8,970 4,929---------------- ----- -------- --------- -------- ----------Minority interests 1,148 - - 1,148---------------- ----- -------- --------- -------- ----------Profit attributableto equity shareholdersof the Group (5,209) 20 8,970 3,781---------------- ----- -------- --------- -------- ---------- EARNINGS PER SHARE Basic earnings per shareWeighted average numberof shares (thousands) 53,677 53,677---------------- ----- -------- --------- -------- ----------BASIC EPS (9.70)p 7.04p---------------- ----- -------- --------- -------- ---------- Diluted earnings per share Weighted average numberof shares (thousands)as above 53,677 53,677Add - Sharesave options 259 259 - Options 411 411 ---------------- ----- -------- --------- -------- ----------Total 54,347 54,347---------------- ----- -------- --------- -------- ----------DILUTED EARNINGS PERSHARE (9.70)*p 6.96p---------------- ----- -------- --------- -------- ---------- * Due to losses the numerical calculation of diluted earnings per share resultsis a figure which is more than the basic earnings per share. As such the dilutedfigure has been reported as equal to the basic figure. M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENTNotes - Continued 3. Segmental information The Group's primary reporting format for reporting segments is by geographicalmarket Year ended 31 December 2007 UK Asia and America Europe Total Australia Note £000 £000 £000 £000 £000---------------- ----- -------- --------- -------- --------- ----------REVENUE 52,765 24,663 4,132 6,060 87,620---------------- ----- -------- --------- -------- --------- ---------- Operating profit 7,761 550 581 722 9,614---------------- ----- -------- --------- -------- --------- ----------LESS excluded items- Amortisation of intangibles 608 - - - 608---------------- ----- -------- --------- -------- --------- ----------HEADLINE OPERATINGPROFIT 8,369 550 581 722 10,222---------------- ----- -------- --------- -------- --------- ----------Share of results of associates 25 - - 309 334Net interest 6,7 1,448 10 2 (90) 1,370---------------- ----- -------- --------- -------- --------- ----------HEADLINE PROFIT BEFORETAXATION 9,842 560 583 941 11,926---------------- ----- -------- --------- -------- --------- ----------ADD BACK excluded items- Amortisation of intangibles (608) - - (53) (661)- Fair value adjustments to minority put option liabilities (3,052) - - - (3,052)- Notional interest on deferred consideration (257) - - - (257)---------------- ----- -------- --------- -------- --------- ----------Total of headlineadjustments (3,917) - - (53) (3,970)---------------- ----- -------- --------- -------- --------- ----------Profit before taxation 5,925 560 583 888 7,956---------------- ----- -------- --------- -------- --------- ----------Taxation (2,833) (368) (207) (122) (3,530)---------------- ----- -------- --------- -------- --------- ----------Profit after taxation 3,092 192 376 766 4,426---------------- ----- -------- --------- -------- --------- ----------Minority interests 997 59 67 45 1,168---------------- ----- -------- --------- -------- --------- ----------Profit attributable toequity shareholders ofthe Group 2,095 133 309 721 3,258---------------- ----- -------- --------- -------- --------- ----------LESS excluded items- Headline adjustments above 3,917 - - 53 3,970- Deferred tax on amortisation of acquired intangibles (182) - - - (182)---------------- ----- -------- --------- -------- --------- ----------HEADLINE PROFITATTRIBUTABLE TO EQUITYSHARE HOLDERS OF THEGROUP 5,830 133 309 774 7,046---------------- ----- -------- --------- -------- --------- ----------HEADLINE EPS 12.55p M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENTNotes - Continued 3 Segmental information (continued) Year ended 31 December 2006 UK Asia and America Europe Total Australia Note £000 £000 £000 £000 £000---------------- ----- -------- --------- -------- --------- ---------- REVENUE 44,352 25,638 3,632 2,271 75,893---------------- ----- -------- --------- -------- --------- ---------- Operating profit 6,323 1,496 (261) (1,304) 6,254---------------- ----- -------- --------- -------- --------- ----------LESS excluded items- Amortisation of intangibles - - - 20 20---------------- ----- -------- --------- -------- --------- ----------HEADLINE OPERATINGPROFIT 6,323 1,496 (261) (1,284) 6,274---------------- ----- -------- --------- -------- --------- ----------Share of results ofassociates 5 - - - 5Net interest 6,7 1,455 62 7 (17) 1,507---------------- ----- -------- --------- -------- --------- ----------HEADLINE PROFIT BEFORETAXATION 7,783 1,558 (254) (1,301) 7,786---------------- ----- -------- --------- -------- --------- ----------ADD BACK excluded items- Amortisation of intangibles - - - (20) (20)- Fair value adjustments to minority put option liabilities (8,970) - - - (8,970)- Notional interest on deferred consideration - - - - ----------------- ----- -------- --------- -------- --------- ----------Total of headlineadjustments (8,970) - - (20) (8,990)---------------- ----- -------- --------- -------- --------- ----------Profit before taxation (1,187) 1,558 (254) (1,321) (1,204)---------------- ----- -------- --------- -------- --------- ----------Taxation (2,373) (598) (128) 242 (2,857)---------------- ----- -------- --------- -------- --------- ----------Profit after taxation (3,560) 960 (382) (1,079) (4,061)---------------- ----- -------- --------- -------- --------- ----------Minority interests 1,042 31 67 8 1,148---------------- ----- -------- --------- -------- --------- ----------Profit attributable toequity shareholders ofthe Group (4,602) 929 (449) (1,087) (5,209)---------------- ----- -------- --------- -------- --------- ----------LESS excluded items- Headline adjustments above 8,970 - - 20 8,990---------------- ----- -------- --------- -------- --------- ----------HEADLINE PROFITATTRIBUTABLE TO EQUITYSHARE HOLDERS OF THEGROUP 4,368 929 (449) (1,067) 3,781---------------- ----- -------- --------- -------- --------- ----------HEADLINE EPS 7.04p M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENTNotes - Continued 4. Operating costs Year ended 31 December 2007 2006 £000 £000 Total staff costs 53,763 47,949Other costs 24,243 21,690------------------------- -------- --------Total costs 78,006 69,639------------------------- -------- -------- Other costs includeAmortisation of intangibles- Acquired intangibles 608 20- Capitalised software 106 61Depreciation of plant equipment 1,463 1,151Losses on disposal of fixed assets 36 5 M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENTNotes - Continued 5. SHARE OF ASSOCIATES Year ended 31 December 2007 2006 £000 £000 Share of associates' profit before taxation 491 7Share of associates' taxation (157) (2)Amortisation of intangible (53) -------------------------- -------- -------- 281 5------------------------- -------- -------- 6. FINANCE INCOME Year ended 31 December 2007 2006 £000 £000 Bank interest receivable 1,771 1,540Other interest receivable 38 -------------------------- -------- --------Total finance income 1,809 1,540------------------------- -------- -------- 7. FINANCE EXPENSE Year ended 31 December 2007 2006 £000 £000 Bank interest payable (403) (3)Interest payable on finance leases (2) (13)Other interest payable (34) (17)------------------------- -------- --------Total interest payable (439) (33)------------------------- -------- -------- Notional interest on deferred consideration (257) -Fair value adjustments to minority shareholder put optionsliabilities (3,052) (8,970)------------------------- -------- --------Total finance expense (3,748) (9,003)------------------------- -------- -------- M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENTNotes - Continued 8. TAXATION Year ended 31 December 2007 2006 £000 £000 Current taxationTaxation in the year- UK (3,223) (2,280)- Overseas (1,119) (916)Withholding taxes payable (7) -Utilisation of previously unrecognised tax losses 128 -Adjustment for over provision in prior periods 138 68------------------------- -------- --------Total (4,083) (3,128)------------------------- -------- -------- Deferred taxationOrigination and reversal of temporary timing differences 606 271Effect of changes in tax rates (53) -------------------------- -------- --------Total 553 271------------------------- -------- --------Total taxation (3,530) (2,857)------------------------- -------- -------- The difference between the actual tax and the standard rate of corporation taxin the UK applied to profits for the year are as follows: Year ended 31 December 2007 2006 £000 £000 Profit / (loss) before taxation 7,956 (1,204) Taxation at UK Corporation tax rate of 30% (2,387) 361Tax effect of associates 93 1Expenses not deductible for tax (212) (249)Different tax rates applicable in overseas jurisdictions (93) (56)Effect of changes in tax rates on deferred tax (53) -Withholding taxes (7) -Utilisation of previously unrecognised tax losses 128 -Adjustment for over provision in prior periods 138 68Tax losses for which no deferred tax asset was recognised (145) (291)Adjustment for (over) provision in prior periods (915) (2,691)Tax losses for which no deferred income tax asset wasrecognised (77) -------------------------- -------- -------- (3,530) (2,857)------------------------- -------- -------- 9. DIVIDENDS Year ended 31 December 2007 2006 £000 £000 2006 final dividend 2.43p (2005 1.78p) 1,300 9652007 interim dividend 0.87p (2006 0.77p) 513 412------------------------- -------- -------- 1,813 1,377------------------------- -------- -------- Proposed 2007 final dividend of 2.75p £1,642k. Dividends relate to the profit of the following years: Year ended 31 December 2007 2006 £000 £000 Interim dividends 513 412Final dividends 1,642 1,300------------------------- -------- -------- 2,155 1,712------------------------- -------- --------Headline dividend cover 3.2 2.2 M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENTNotes - Continued 10. ACQUISITIONS CLEAR IDEAS LTD On 12 July 2007 the Group acquired 100% of the share capital of Clear Ideas Ltd(Clear). The acquisition was satisfied with an initial cash payment of £13.2mand an issue of 3,444,791 shares. Deferred contingent consideration will be paidover the period 2008 to 2011 subject to the performance of the business. As at31 December 2007 the value of contingent consideration is £11.9m. For the year ending 31 December 2007 Clear had revenues of £10.8m and anoperating profit of £2.4m. Book & fair value £000 Non current assetsIntangibles 23Property, Plant and equipment 423------------------------- -------- 446------------------------- -------- Current assetsTrade and other receivables 4,034Other current assets 864Cash and cash equivalents 776------------------------- -------- 5,674Current liabilities (2,263)Non current liabilities -------------------------- -------- 3,857------------------------- -------- M&C SAATCHI BERLIN (2006 ACQUISITION) On 24 July 2006 the Group acquired 80% of 03 International Projects GmbH(renamed M&C Saatchi Berlin GmbH). In 2007 final consideration of £358k was paid(2006 contingent consideration £67k). EXERCISE OF PUT OPTIONS In July 2007 the Group acquired 19.5% of the share capital of Walker MediaHoldings Ltd from its minority shareholders satisfied by an initial payment of£8.8m cash and an issue of 1,888,236 shares. In May 2007 the Group acquired 6.3% of the share capital of Talk PR Ltd from thecompany's minority shareholders with an issue of 105,956 shares. ZAPPING / M&C SAATCHI On 8 March 2007 the Group acquired 25% of the Zapping Publicidad SA group ofcompanies, with a commitment to acquire a further 26% on 1 July 2008 and 24% on1 July 2009. ACCOUNTING METHODS IFRS 3 requires the acquiree's identifiable assets and liabilities to berecognised at fair value at the acquisition date. The acquisition of Clear IdeasLtd in 2007 and M&C Saatchi Berlin GmbH in 2006 fall within the scope of IFRS3. The acquisition of additional shares in Walker Media Holdings Ltd and Talk PRLtd due to the exercise of put options does not change the nature of ourcontrol. The transactions fall outside the scope of IFRS3 business combinations.Goodwill arose on the exercise of these put options, being the excess of thefair value of the consideration over the Group's interest in the value of theidentifiable net assets acquired. The acquisition of 25% of Zapping / M&C Saatchi is accounted for as anassociate. INVESTMENT IN SUBSIDIARIES Clear Walker Media Talk PR Contingent Total 2006 consideration paid £000 £000 £000 £000 £000 £000Consideration,satisfied by:Cash 13,948 8,799 - 383 23,130 674Fair value ofdeferred andcontingentconsideration 10,535 5,127 - (67) 15,595 67Shares issued 5,563 2,964 175 - 8,702 ---------------- -------- -------- -------- -------- -------- ------- 30,046 16,890 175 316 47,427 741--------------- -------- -------- -------- -------- -------- ------- Direct costsof acquisition 559 123 3 12 697 67--------------- -------- -------- -------- -------- -------- ------- 30,605 17,013 178 328 48,124 808--------------- -------- -------- -------- -------- -------- ------- LESS- Fair value of net assets/(liabilities) 3,857 (275) - - 3,582 39- Intangibleassets acquired 5,833 - - - 5,833 20- Deferred taxacquired (1,648) - - - (1,648) ---------------- -------- -------- -------- -------- -------- -------Goodwill created 22,563 17,288 178 328 40,357 749--------------- -------- -------- -------- -------- -------- ------- Goodwill acquired 23 - - - 23 ---------------- -------- -------- -------- -------- -------- -------Goodwill additions 22,586 17,288 178 328 40,380 749--------------- -------- -------- -------- -------- -------- ------- Goodwill represents the value of our staff and our investments in potentialfuture profits. Investment in Associate 2007Zapping / M&C Saatchi £000Consideration, satisfied by:Cash 1,368Fair value of deferred consideration 2,216--------------------- -------- 3,584--------------------- -------- Direct costs of acquisition 219--------------------- -------- 3,803--------------------- -------- LESS- Fair value of net assets 131- Intangible assets acquired 95--------------------- --------Goodwill created 3,577--------------------- -------- 11. Deferred and Contingent consideration 2007 2006 £000 £000Amounts falling within one year- Deferred (7,311) -- Contingent (2,500) (67)------------------------- -------- -------- (9,811) (67)------------------------- -------- -------- Amounts falling after one year- Contingent (8,325) -------------------------- -------- -------- (18,136) (67)------------------------- -------- -------- 2007 2006 £000 £000------------------------- -------- --------1 January (67) -------------------------- -------- --------Exchange difference (6) -Acquisitions (17,879) (67)Notional interest charge (257) -Paid 351 -Adjustment to prior period estimate (278) -------------------------- -------- --------31 December (18,136) (67)------------------------- -------- -------- Contingent consideration is estimated based on projections. M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENTNotes - Continued 12. RESERVES Share Share Merger Treasury Minority Foreign Retained Subtotal Minority Total capital premium reserve reserve interest put exchange earnings interests option reserve reserve £000 £000 £000 £000 £000 £000 £000 £000 £000 £000--------------- ------ ------ ------ ------ ------ ------ ------ ------- ------ ------1 January 2006 542 9,618 14,756 - (13,219) - 4,800 16,497 549 17,046Exchangedifferences - - - - - (371) - (371) (39) (410)Capital additions - - - - - - - - 90 90Deferred taxon options - - - - - - 36 36 - 36Equity settledshare based payments - - - - - - 246 246 - 246New minority shareholderput options issued - - - - (99) - - (99) - (99)Transfer betweenmajority andminority reserves - - - - - - 213 213 (213) -Dividends - - - - - - (1,377) (1,377) (959) (2,336)Purchase ofown shares - - - (792) - - - (792) - (792)Loss for the year - - - - - - (5,179) (5,179) 1,148 (4,031)--------------- ------ ------ ------ ------ ------ ------ ------ ------- ------ ------31 December 2006 542 9,618 14,756 (792) (13,318) (371) (1,261) 9,174 576 9,750--------------- ------ ------ ------ ------ ------ ------ ------ ------- ------ ------ Issue of shares foracquisitions 55 3,140 5,529 - - - - 8,724 - 8,724Exchange rate movements - - - - - 689 - 689 (1) 688Exercise ofminority put options - - - - 8,741 - 8,353 17,094 - 17,094New minority shareholderput options - - - - (2,299) - - (2,299) - (2,299)Transfer betweenmajority and minority reserves - - - - - - (350) (350) 350 -Other - - - - - - 434 434 (134) 300Equity settledshare based payments - - - - - - 432 432 - 432Profit for the year - - - - - - 3,258 3,258 1,168 4,426Dividends - - - - - - (1,813) (1,813) (1,404) (3,217)--------------- ------ ------ ------ ------ ------ ------ ------ ------- ------ ------31 December2007 597 12,758 20,285 (792) (6,876) 318 9,053 35,343 555 35,898--------------- ------ ------ ------ ------ ------ ------ ------ ------- ------ ------ The definitions of the reserves reported in the above note can be found in Note 15. M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENTNotes - Continued 13. Cash generated from operations 2007 2006 £000 £000Revenue 87,620 75,877Operating expenses (78,006) (69,639)------------------------- -------- --------Operating profit 9,614 6,238------------------------- -------- -------- Adjustments for:Depreciation of plant and equipment 1,463 1,212(Profit) / losses on sale of plant and equipment (36) 5(Profit) on sale of software intangibles (2) -Amortisation of acquired intangible assets 608 20Amortisation of capitalised software intangible assets 106 -Non cash share based incentive plans 432 213------------------------- -------- --------Operating cash flow before movements in working capitaland provisions 12,185 7,688------------------------- -------- -------- (Increase)/decrease in debtors (22,064) 4,146Decrease in creditors 18,870 6,882------------------------- -------- --------Net cash flow from operating activities 8,991 18,716------------------------- -------- -------- 14. Cash consumed by acquisitions 2007 2006 £000 £000Initial cash consideration including capitalisedacquisition costs- Clear Ideas Ltd (14,508) -- Walker Media Ltd (8,922) -- Talk PR (3) -- M&C Saatchi Berlin Gmbh (358) (748)------------------------- -------- -------- (23,791) (748)------------------------- -------- -------- Less cash and cash equivalents acquired 776 113------------------------- -------- -------- (23,015) (635)------------------------- -------- -------- Purchase of associate (Zapping) (1,587) -------------------------- -------- -------- (24,602) (635)------------------------- -------- -------- 15. DEFINITION OF TERMS Ordinary share capital Total issued share capital at nominal value. Share premium Premium paid for shares above share capital, where that premium was not taken tomerger reserve. Merger reserve Premium paid for shares above share capital, caused by the acquisition of morethan 90% of subsidiaries shares, less any impairment or amortisation of theinvestment (which is released to retained earnings). Treasury Reserve Amount paid for own shares acquired. Minority Interest put Option reserve Corresponds to related debit to the initial fair value of the liability inrespect of the put options at creation. When the put option is exercised therelated amount in this reserve is taken to goodwill. Foreign Exchange reserve Gains and losses on translating net assets of overseas operations. Retained Earnings Cumulative gains and losses recognised. M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENTNotes - Continued 16. First Time adoption of international financial reporting standards This is the first year that the Group presents its financial statements inaccordance with IFRS as adopted by the European Union. The following disclosureis required in the transition year, as the last Group financial statements werefor the year ended 31 December 2006 and the date of transition is 1 January2006. The 2006 comparatives in the financial statements have been revised so that theyare compliant with the IFRS based Group accounting policies in note 1. Thefollowing reconciliation show the impact of the transition from UK GAAP to IFRS. FiRst time adoption exemptions taken (IFRS 1) • We have not restated any business combinations prior to 1 January 2006 (IFRS 3). • Translation differences on all foreign operations as at 1 January 2006 are treated as nil (IAS 21). Reconciliation from UK GAAP to IFRS The following reconciliations are presented below in order to explain the effectof the transition to IFRS and to show how the comparative results have beenrestated: • Reconciliation of profit for the year ended 31 December 2006; • Reconciliation in movements of 1 January 2006 balance sheet; and • Reconciliation in movements of 31 December 2006 balance sheet. The IFRS adjustments included within these reconciliations are explained below. Reconciliation of Profit for the Year Ended 31 December 2006 UK GAAP IFRS 3 IAS 32 & IAS 39 IAS 39 (IFRS format) Acquisitions Put options Liability Other IFRS recognition £000 £000 £000 £000 £000 £000 note a note b note c note d--------------- ------- -------- -------- -------- ------ ---------Billings 369,490 - - - (845) 368,645--------------- ------- -------- -------- -------- ------ ---------Revenue 75,877 - - 16 - 75,893Operating costs (71,354) 1,735 - - (20) (69,639)--------------- ------- -------- -------- -------- ------ ---------Operating profit 4,523 1,735 - 16 (20) 6,254--------------- ------- -------- -------- -------- ------ ---------Share of results ofassociates 15 - - - (10) 5Finance income 1,540 - - - - 1,540Finance costs (41) - (8,970) - 8 (9,003)--------------- ------- -------- -------- -------- ------ ---------Profit / (loss) before taxation 6,037 1,735 (8,970) 16 (22) (1,204)--------------- ------- -------- -------- -------- ------ ---------Taxation onprofits (2,886) - - (5) 34 (2,857)--------------- ------- -------- -------- -------- ------ ---------Profit / (loss) after taxation 3,151 1,735 (8,970) 11 12 (4,061)--------------- ------- -------- -------- -------- ------ --------- M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENTNotes - Continued Reconciliation in movements in 1 January 2006 Balance Sheet UK GAAP IAS 32 & IAS 39 IAS 39 (IFRS format) Put options Liability recognition Other IFRS £000 £000 £000 £000 £000 note b note c note d--------------- ------- -------- -------- ------ ---------Non current assets Intangible assets 14,592 - - - 14,592Investments in associates 81 - - (81) -Plant, equipment 3,194 - - - 3,194Deferred tax assets 354 - 959 (36) 1,277Other noncurrent assets 243 - - - 243--------------- ------- -------- -------- ------ --------- 18,464 - 959 (117) 19,306--------------- ------- -------- -------- ------ ---------Current assetsWork in progress 3,277 - - (3,277) -Trade and other receivables 49,953 - - 3,277 53,230Current tax assets 599 - - - 599Cash and cash equivalents 20,486 - - - 20,486--------------- ------- -------- -------- ------ --------- 74,315 - - - 74,315--------------- ------- -------- -------- ------ --------- Current liabilitiesTrade and other payables (56,088) - (3,196) - (59,284)Current tax liabilities (2,760) - - - (2,760)Other financialliabilities (121) - - - (121)Minority shareholderput option liabilities - (5,540) - - (5,540)--------------- ------- -------- -------- ------ --------- (58,969) (5,540) (3,196) - (67,705)--------------- ------- -------- -------- ------ ---------Net current assets 15,346 (5,540) (3,196) - 6,610--------------- ------- -------- -------- ------ ---------Total assets less currentliabilities 33,810 (5,540) (2,237) (117) 25,916--------------- ------- -------- -------- ------ --------- Non current liabilities Deferred tax liabilities (21) - - - (21)Other financial liabilities (36) - - - (36)Minority shareholderput option liabilities - (7,679) - - (7,679)Other non currentliabilities (1,215) - - 81 (1,134)--------------- ------- -------- -------- ------ --------- (1,272) (7,679) - 81 (8,870)--------------- ------- -------- -------- ------ ---------Total netassets 32,538 (13,219) (2,237) (36) 17,046=============== ======= ======== ======== ====== ========= EquityShare capital 542 - - - 542Share premium 9,618 - - - 9,618Merger reserve 14,756 - - - 14,756Minority interest putoption reserve - (13,219) - - (13,219)Retained earnings 6,700 - (1,864) (36) 4,800--------------- ------- -------- -------- ------ --------- 31,616 (13,219) (1,864) (36) 16,497--------------- ------- -------- -------- ------ ---------Minority interests 922 - (373) - 549--------------- ------- -------- -------- ------ ---------Total equity 32,538 (13,219) (2,237) (36) 17,046=============== ======= ======== ======== ====== ========= M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENTNotes - Continued Reconciliation in movements of 31 December 2006 Balance Sheet UK GAAP IFRS 3 IAS 32 & IAS 39 IAS 39 Liability (IFRS format) Acquisitions Put options recognition Other IFRS £000 £000 £000 £000 £000 £000 note a note b note c note d--------------- -------- -------- -------- -------- ------ -------- Non current assetsIntangible assets 13,555 1,735 - - 67 15,357Investments inassociates 81 - - - (81) -Plant equipment 3,618 - - - (87) 3,531Deferred taxassets 693 - - 954 29 1,676Other noncurrent assets 460 - - - - 460--------------- -------- -------- -------- -------- ------ -------- 18,407 1,735 - 954 (72) 21,024--------------- -------- -------- -------- -------- ------ --------Current assetsWork in progress 2,416 - - - (2,416) -Trade and otherreceivables 45,900 - - - 2,421 48,321Current taxassets 88 - - - - 88Cash and cashequivalents 31,284 - - - - 31,284--------------- -------- -------- -------- -------- ------ -------- 79,688 - - - 5 79,693--------------- -------- -------- -------- -------- ------ --------Current liabilitiesTrade andother payables (63,330) - - (3,180) - (66,510)Current taxliabilities (1,036) - - - - (1,036)Other financialliabilities (34) - - - - (34)Deferredconsideration (67) - - - - (67)Minority shareholderput option liabilities - - (11,077) - - (11,077)--------------- -------- -------- -------- -------- ------ -------- (64,467) - (11,077) (3,180) - (78,724)--------------- -------- -------- -------- -------- ------ --------Net current assets 15,221 - (11,077) (3,180) 5 969-------------- -------- -------- -------- -------- ------ --------Total assets less currentliabilities 33,628 1,735 (11,077) (2,226) (67) 21,993--------------- -------- -------- -------- -------- ------ --------Non current liabilitiesDeferred taxliabilities (141) - - - - (141)Other financialliabilities (29) - - - - (29)Minority shareholderput option liabilities - - (11,211) - - (11,211)Other non currentliabilities (938) - - - 76 (862)--------------- -------- -------- -------- -------- ------ -------- (1,108) - (11,211) - 76 (12,243)--------------- -------- -------- -------- -------- ------ --------Total net assets 32,520 1,735 (22,288) (2,226) 9 9,750=============== ======== ======== ======== ======== ====== ======== EquityShare capital 542 - - - - 542Share premium 9,618 - - - - 9,618Merger reserve 13,553 1,203 - - - 14,756Treasury reserve (792) - - - - (792)Other reserves - - (13,318) - - (13,318)Foreign exchangereserve - - - - (371) (371)Retainedearnings / (loss) 8,437 532 (8,970) (1,640) 380 (1,261)--------------- -------- -------- -------- -------- ------ -------- 31,358 1,735 (22,288) (1,640) 9 9,174--------------- -------- -------- -------- -------- ------ -------- Minority interests 1,162 - - (586) - 576-------------- -------- -------- -------- -------- ------ --------Total equity 32,520 1,735 (22,288) (2,226) 9 9,750=============== ======== ======== ======== ======== ====== ======== M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENTNotes - Continued Notes to IFRS adjustments a) IFRS 3 Business combinations Under IFRS goodwill is not amortised, instead annual impairment reviews areconducted. As the Group has elected not to apply IFRS 3 (business combinations)retrospectively, the only adjustment is to reverse the 2006 amortisation charge. b) IAS 32 & IAS 39 Minority shareholder put options IAS 32 & IAS 39 requires a valuation of the liability Group companies have tominority shareholders that have the right to exchange their minorityshareholdings in the subsidiary companies for shares in M&C Saatchi plc (a putoption) at their creation (or at the Group's transition to IFRS) and then ateach reporting date. The movement in the valuation of the liability is chargedto the income statement (there is no revaluation of the reserve). c) IAS 39 Liability recognition IAS 39 requires a liability to be recognised based on the legal obligation topay; UK GAAP recognises a liability where there is a reasonable expectation thatthe liability will be paid. Many of our contracts are formed verbally and thisgives rise to uncertainty which is treated differently by UK and IFRS GAAP. d) Other Other adjustments have been made in respect of IAS 38 intangible assets, IAS 1and IAS 39 presentation of financial statements (associates), IAS 12 deferredtax, IAS 21 creation of a foreign currency reserve and IAS18 billingsrecognition. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
M&C Saatchi