21st Sep 2011 07:00
M&C SAATCHI PLC
INTERIM RESULTS
SIX MONTHS TO
30 JUNE 2011
21 September 2011
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2011
21 September 2011
GROUP HIGHLIGHTS
¬ Revenues up by 23% to £71.9m (2010: £58.2m)
¬ Like-for-like* revenue up 21%
¬ Headline* operating profit up 22% to £7.6m (2010: £6.3m)
¬ Headline* profit before tax up 24% to £7.7m (2010: £6.3m)
¬ Headline* basic earnings per share up 10% to 7.15p (2010: 6.49p)
¬ Interim dividend increased 15% to 1.0p (2010: 0.87p)
Commenting on the results, David Kershaw, the Chief Executive, said:
"The results for the period show significant progress. Trading has been strong in a tough market. We experienced good growth in our UK and other European businesses. The Asia and Australasia region had a more challenging half but we are pleased that our African and American operations are all moving towards profit. Revenue was 23% up on the same period last year and profit before tax increased 24%.
"The network is now in place and the new offices are all on course to be profitable by the end of the year. We have more multi-national clients as well as rolling out our higher growth companies. We are confident about our progress but conscious of any macro effects beyond our control in 2012. We remain vigilant about costs and maintaining our strong balance sheet."
For further information please call:
David Kershaw - M&C Saatchi 020-7543-4500
Susanna Voyle - Tulchan Communications 020-7353-4200Tom Murray
Richard Thomas, Nomad - Numis Securities 020-7260-1000
Charles Farquhar, Corporate Broking
* Headline results are stated before accounting for the amortisation of acquired intangibles (including goodwill), the fair value adjustment to minority put option liabilities, revisions to contingent consideration and call option revaluations. The reconciliation of the difference between the headline results and the reported results is set out in note 4 on page 14. The like-for-like revenue comparisons referred to in this report are stated after excluding the impact of foreign currency movements.
SUMMARY OF RESULTS
Overview
The Board of M&C Saatchi plc announces the unaudited results for the six months ended30 June 2011.
We are pleased to report a strong set of results for the first six months of 2011 which saw revenue growth of 23% to £71.9m (2010: £58.2m). Like-for-like revenue growth which excludes the impact of exchange rate movements increased by 21% to £70.6m (2010: £55.3m).
Headline operating profit was up 22% to £7.6m (2010: £6.3m). Regionally, there were especially good first half performances from both the UK and the rest of Europe. The overall operating margin dipped from 10.7% in 2010 to 10.6%, due to some pricing pressure in China and Australia.
There was a net nil interest charge in the period (2010: £36k) and a profit contribution of £105k from the Group's associates in Spain and the Middle East (2010: £31k). This left a headline profit before tax of £7.7m (2010: £6.3m), 24% up on last year.
The Group's headline tax rate (excluding associates) has gone down to 32.5% (2010: 36.2%). The decrease is due to a reduction in our organic start-up losses, with some companies now making a profit and utilising their historic tax losses. Our present and projected tax rate has further been reduced by the reduction in the rate of UK corporation tax.
With many of these newer companies within the Group now making a profit, the minority interest charge has risen to £829k (2010: £8k).
The headline profit attributable to the equity shareholders of the Group increased 11% to £4.4m.
Headline basic EPS has grown 10% to 7.15p (2010: 6.49p).
At 30 June 2011 the Group had net cash of £14.8m (2010: 7.3m). Cash balances across the Group stood at £17.4m down from £31.4m at the 2010 year-end, with the release to suppliers over the first half of some exceptionally large client advance payments received at the end of 2010. We were utilising £2.6m of the three-year £10m facility provided by RBS, which continues until 2014.
During the period the Group generated free cash flow of £6.8m. There was a working capital outflow of £19.0m and £1.6m spent on acquisitions. The total net outflow was £14.0m primarily due to the release to suppliers of the client 2010 advance payments. Other net outflows including dividends paid to minority interest shareholders totalled £0.2m.
REVIEW OF OPERATIONS
With the worldwide agency network now in place, the key development from a year ago has been the network's ability to win regional and international business. As well as the first quarter wins confirmed with the preliminary results (FTI Consulting, Kasperski and Garmin), we have maintained this momentum winning new assignments from Vertu, Google, Siemens, Lenovo and Pernod Ricard.
UK
Our first half financial performance was very good. Revenue increased by 24% to £31.4m (2010: £25.3m) and the headline operating profit (excluding Group costs) increased 23% to £6.5m (2010: £5.3m). Excluding the impact of the Group recharges, the headline operating margin remained steady at 20.8% (2010: 21.0%), which was pleasing in the context of a media buying market that continues to be very competitive.
The UK has been the lead country in most of the international wins. Importantly, the new management has succeeded in developing a robust integrated offer, which clients are increasingly finding appealing. Data and social media operations were launched in the second quarter and are very much in demand. M&C Saatchi Mobile (acquired last year as Inside Mobile) is growing fast and has developed an extensive client portfolio that includes Boots, BMW, Ernst & Young, Hyundai, Pfizer and Wonga.
Europe
Our offices all made good progress in the first half. Germany delivered positive results, adding more Ferrero brands. France is still a tough market but benefited from strong digital and PR performances. Italy won Sky and very impressively was voted the country's Best Independent Agency in its first year of trading. Spain (an Associate) made a better contribution and won Correos, the national postal service.
Revenues increased 26% to £6.6m (2010: £5.3m). Using constant currency rates meant that the revenue increased by 25%. Headline operating profit (excluding Group costs) increased 44% to £0.9m (2010: £0.6m) and the headline operating margin for the first half increased to 12.9% (2010: 11.2%),
Middle East & Africa
Both our African offices made big steps forward in revenue terms and Cape Town and Johannesburg are set to be profitable in the second half. First half 2011 revenues were £1.1m (2010: £0.1m) and there is now a significant client base with key wins in the period being Samsung and Nestlé. The offices were virtually at breakeven in the first half, which compares with a loss of £0.3m for the same period last year. We feel they are very well positioned to take advantage of the growing African market.
MENA (an associate) had a challenging period with their performance severely hit by the Arab spring. Under our agreed contract, the Group's share of losses was negligible. However, opportunities are beginning to emerge within the region as stability begins to return.
Asia and Australasia
A relatively weaker result was returned from the Asian and Australasian region with the performance eroded by Australia's ANZ advertising loss at the end of last year. This together with some market pricing pressure in both Australia and China meant lower operating margins. On a like-for-like basis and using constant exchange rates, revenue has increased by 8%. Operating profit was down 17% to £1.3m (2010: £1.6) with a fall in operating margin from 7.9% in 2010 to 5.6%.
Australia has clawed back much of the loss through cost control and new business wins, including EFTPOS, Tennis Australia and Dick Smith. Greater China has been gaining some revenue momentum and led the Lenovo new business win. Malaysia maintained their strong financial performance, whilst New Zealand had a good first half winning Education NZ. Our challenge in India is to develop advertising scale to add to our strong direct and digital offering.
Americas
In New York, we now have a single property to house Clear, Sport & Entertainment and Mobile in one hub. This will form the foundation for growth into other marketing services and will be a key development focus in the next eighteen months. Los Angeles has been slow; the office won Ugg but several client losses resulted in a profit decline. The new acquisition in Brazil has meant scale and profitability. Sao Paulo now has a good impetus and has been winning new business; including Minerva and Tetra Pak.
Revenues using constant exchange rates were up 76% to £3.0m (2010: £1.7m) boosted by the new acquisition revenues. The region made a small operating loss of £0.1m (2010: a loss of £0.1m)
Clear
Clear experienced a slow start in the UK but is now performing more in line with our expectations under a new management team. Asia continues to grow well, whilst the US is flourishing.
There were good new business wins, including Bacardi, Fonterra, HTC, VFC and Pepsi.
In January, Clear added a new office in Singapore and is now looking to open an office in San Francisco to capitalise on the US demand.
Like-for-like revenues were up 17% to £6.2m (2010: £5.3m). Headline operating profit was flat at £1.2m with Clear's operating margin slipping to 19.9% (2010: 22.3%) due to some pressure on pricing, mainly in the UK.
Outlook
The network is now in place and the new offices are all on course to be profitable by the end of the year. We have more multi-national clients. We have successfully invested in new higher growth businesses and subsequently rolled out proven models.
We are confident about our progress but are conscious of any macro effects beyond our control in 2012. Consequently, we remain vigilant about costs and maintaining our strong balance sheet.
This report comments on the unaudited consolidated income statement of M&C Saatchi plc (the "Group") for the six months to 30 June 2011 compared with unaudited consolidated income statement for the same period in 2010. The report also comments on the numbers before accounting for the amortisation of acquired intangibles (including goodwill), the fair value adjustment to minority put option liabilities, revisions to contingent consideration and call option revaluations.
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED INCOME STATEMENT
ENDED 30 JUNE 2011
Six months ended 30 June 2011 | Six months ended 30 June 2010 | Year ended 31 December 2010 | |||||||
Note | £000 | £000 | £000 | ||||||
Billings | 242,035 | 217,006 | 463,979 | ||||||
Revenue | 4 | 71,906 | 58,227 | 125,144 | |||||
Operating costs | (64,404) | (52,088) | (112,469) | ||||||
Operating profit | 4 | 7,502 | 6,139 | 12,675 | |||||
Share of results of associates | 105 | 31 | 61 | ||||||
Finance income | 6 | 171 | 127 | 227 | |||||
Finance costs | 7 | (709) | (1,456) | (5,151) | |||||
Profit before taxation | 4 | 7,069 | 4,841 | 7,812 | |||||
Taxation on profits | 8 | (2,395) | (2,232) | (4,739) | |||||
Profit for the financial period | 4,674 | 2,609 | 3,073 | ||||||
Profit attributable to: | |||||||||
Equity shareholders of the Group | 4 | 3,845 | 2,601 | 2,560 | |||||
Non controlling interest | 829 | 8 | 513 | ||||||
4,674 | 2,609 | 3,073 | |||||||
Earnings per share | 4 | ||||||||
Basic | 6.20p | 4.22p | 4.15p | ||||||
Diluted | 6.08p | 4.09p | 4.04p | ||||||
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
ENDED 30 JUNE 2011
Six months ended 30 June 2011
| Six months ended 30 June 2010
| Year ended 31 December 2010
| |||||||
£000 | £000 | £000 | |||||||
Profit for the period |
4,674 |
2,609 |
3,073 | ||||||
Other comprehensive income: | |||||||||
Exchange differences on translating foreign operations before tax | 426 | (313) | 509 | ||||||
Tax benefit / (expense) | - | - | 5 | ||||||
Other comprehensive income for the period net of tax | 426 | (313) | 514 | ||||||
Total comprehensive income for the period | 5,100
| 2,296
| 3,587 | ||||||
Total comprehensive income attributable to: | |||||||||
Equity shareholders of the Group | 4,271 | 2,288 | 3,074 | ||||||
Non controlling interests | 829 | 8 | 513 | ||||||
5,100 | 2,296 | 3,587 |
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2011
30 June 2011 | 30 June 2010 | 31 December 2010
| |||||||
£000 | £000 | £000 | |||||||
NON CURRENT ASSETS | |||||||||
Intangible assets | 62,234 | 60,957 | 61,125 | ||||||
Investments in associates | 2,196 | 1,745 | 1,579 | ||||||
Plant and equipment | 5,884 | 4,415 | 5,487 | ||||||
Deferred tax assets | 651 | 1,919 | 825 | ||||||
Other non current assets | 5,255 | 4,224 | 4,752 | ||||||
76,220 | 73,260 | 73,768 | |||||||
CURRENT ASSETS | |||||||||
Trade and other receivables | 67,597 | 57,429 | 80,245 | ||||||
Current tax assets | 873 | 83 | 125 | ||||||
Cash and cash equivalents | 17,420 | 12,809 | 31,388 | ||||||
85,890 | 70,321 | 111,758 | |||||||
CURRENT LIABILITIES | |||||||||
Trade and other payables | (82,831) | (71,407) | (113,480) | ||||||
Current tax liabilities | (2,692) | (1,794) | (1,275) | ||||||
Other financial liabilities | (97) | (954) | (2,538) | ||||||
Deferred and contingent consideration | (260) | (1,665) | (331) | ||||||
Minority shareholder put options liabilities | (1,551) | (964) | (3,873) | ||||||
(87,431) | (76,784) | (121,497) | |||||||
Net current liabilities | (1,541) | (6,463) | (9,739) | ||||||
Total assets less current liabilities | 74,679 | 66,797 | 64,029 | ||||||
Non current liabilities | |||||||||
Deferred tax liabilities | (902) | (836) | (942) | ||||||
Other financial liabilities | (2,614) | (5,484) | (143) | ||||||
Contingent consideration | - | - | (343) | ||||||
Minority shareholder put options liabilities | (18,152) | (11,250) | (11,162) | ||||||
Other non current liabilities | (300) | (425) | (368) | ||||||
(21,968) | (17,995) | (12,958) | |||||||
Net assets | 52,711 | 48,802 | 51,071 | ||||||
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED BALANCE SHEET (CONTINUED)
AT 30 JUNE 2011
30 June 2011 | 30 June 2010 | 31 December 2010
| |||||||
£000 | £000 | £000 | |||||||
Equity | |||||||||
Share capital | 632 | 623 | 625 | ||||||
Share premium | 13,455 | 12,758 | 12,822 | ||||||
Merger reserve | 21,922 | 21,922 | 21,922 | ||||||
Treasury reserve | (792) | (792) | (792) | ||||||
Minority interest put option reserve | (14,652) | (11,260) | (10,466) | ||||||
Non controlling interest acquired | (130) | (119) | (130) | ||||||
Foreign exchange reserve | 3,088 | 1,835 | 2,662 | ||||||
Retained earnings | 26,530 | 23,044 | 23,053 | ||||||
EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE GROUP | 50,053 | 48,011 | 49,696 | ||||||
Non Controlling interestS | 2,658 | 791 | 1,375 | ||||||
TOTAL EQUITY | 52,711 | 48,802 | 51,071 |
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
SIX MONTHS ENDED 30 JUNE 2011
Share capital | Share premium | Merger reserve | Treasury reserve | Minority interest put option reserve | Non controlling interest acquired | Translation of foreign operations | Retained earnings | Subtotal | Non Controlling interests | Total | |
£000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
31 December 2009 | 622 | 12,758 | 22,258 | (792) | (3,480) | - | 2,148 | 18,832 | 52,346 | 770 | 53,116 |
Reserve movements for the Year ending 31 December 2010 |
| ||||||||||
Acquired non controlling interest | 1 | 64 | - | - | 169 | (214) | - | (64) | (44) | - | (44) |
Acquisitions | - | - | - | - | - | - | - | - | - | 218 | 218 |
Issue of shares to minority | - | - | - | - | - | - | - | - | - | 474 | 474 |
Exchange rate movement | - | - | - | - | (13) | - | - | - | (13) | (23) | (36) |
Sale to non controlling interest | - | - | (336) | - | - | 84 | - | 3,550 | 3,298 | - | 3,298 |
Issue of minority put options | - | - | - | - | (7,345) | - | - | - | (7,345) | - | (7,345) |
Cancellation of minority put options | - | - | - | - | 203 | - | - | 15 | 218 | - | 218 |
Option exercise | 2 | - | - | - | - | - | - | (2) | - | - | - |
Reclassification of cash to share based options | - | - | - | - | - | - | - | (284) | (284) | - | (284) |
Reclassification of share to cash based options | - | - | - | - | - | - | - | 158 | 158 | - | 158 |
Share option charge | - | - | - | - | - | - | - | 517 | 517 | - | 517 |
Dividends | - | - | - | - | - | - | - | (2,229) | (2,229) | (577) | (2,806) |
Total comprehensive income for the year | - | - | - | - | - | - | 514 | 2,560 | 3,074 | 513 | 3,587 |
31 December 2010 | 625 | 12,822 | 21,922 | (792) | (10,466) | (130) | 2,662 | 23,053 | 49,696 | 1,375 | 51,071 |
Reserve movements for the Six months ending 30 June 2011 |
| ||||||||||
Acquired non controlling interest | 4 | 633 | - | - | - | - | - | (637) | - | - | - |
Issue of shares to minority | - | - | - | - | - | - | - | - | - | 707 | 707 |
Exchange rate movement | - | - | - | - | - | - | - | - | - | 49 | 49 |
Issue of minority put options | - | - | - | - | (4,316) | - | - | - | (4,316) | - | (4,316) |
Cancellation of minority put options | - | - | - | - | 130 | - | - | 55 | 185 | - | 185 |
Options exercised | 3 | - | - | - | - | - | - | (3) | - | - | - |
Equity settled share based payments | - | - | - | - | - | - | - | 456 | 456 | - | 456 |
Reclassification of share to cash settled options | - | - | - | - | - | - | - | (239) | (239) | - | (239) |
Dividends | - | - | - | - | - | - | - | - | - | (302) | (302) |
Total comprehensive income for the period | - | - | - | - | - | - | 426 | 3,845 | 4,271 | 829 | 5,100 |
30 June 2011 | 632 | 13,455 | 21,922 | (792) | (14,652) | (130) | 3,088 | 26,530 | 50,053 | 2,658 | 52,711 |
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
SIX MONTHS ENDED 30 JUNE 2011
Share capital | Share premium | Merger reserve | Treasury reserve | Minority interest put option reserve | Non controlling interest acquired | Translation of foreign operations | Retained earnings | Subtotal | Non Controlling interests | Total | |
£000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
31 December 2009 | 622 | 12,758 | 22,258 | (792) | (3,480) | - | 2,148 | 18,832 | 52,346 | 770 | 53,116 |
Reserve movements for the Six month ending 30 June 2010 |
| ||||||||||
Issue of shares to new minorities | - | - | - | - | - | - | - | - | - | 23 | 23 |
Acquisitions | - | - | - | - | - | - | - | - | - | 200 | 200 |
Exchange rate movements | - | - | - | - | (1) | - | - | - | (1) | 7 | 6 |
Exercise of share options | 1 | - | - | - | - | - | - | (1) | - | - | - |
Issue of minority put options | - | - | - | - | (7,852) | - | - | - | (7,852) | - | (7,852) |
Non controlling interest disposed | - | - | (336) | - | - | - | - | 3,200 | 2,864 | - | 2,864 |
Non controlling interest acquired | - | - | - | - | 73 | (119) | - | - | (46) | - | (46) |
Equity settled share based payments | - | - | - | - | - | - | - | 185 | 185 | - | 185 |
Reclassification of cash to share settled options | - | - | - | - | - | - | - | (215) | (215) | - | (215) |
Reclassification of share to cash settled options | - | - | - | - | - | - | - | 134 | 134 | - | 134 |
Dividends | - | - | - | - | - | - | - | (1,692) | (1,692) | (217) | (1,909) |
Total comprehensive income for the period | - | - | - | - | - | - | (313) | 2,601 | 2,288 | 8 | 2,296 |
30 June 2010 | 623 | 12,758 | 21,922 | (792) | (11,260) | (119) | 1,835 | 23,044 | 48,011 | 791 | 48,802 |
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
SIX MONTHS ENDED 30 JUNE 2011
Six months ended30 June 2011 | Six months ended30 June 2010 | Year Ended31 December2010 | |||||||
Notes | £000 | £000 | £000 | ||||||
Cash generated from operations | 11 | (9,762) | 1,227 | 28,291 | |||||
Tax paid | (1,088) | (2,136) | (4,636) | ||||||
Net cash (Out) / In flow from operating activities | (10,850) | (909) | 23,655 | ||||||
Acquisitions | 12 | (1,598) | (944) | (1,280) | |||||
Proceeds from sale of plant and equipment | - | - | 30 | ||||||
Purchase of plant and equipment | (1,197) | (747) | (2,354) | ||||||
Purchase of capitalised software | (72) | (68) | (207) | ||||||
Dividends received from associates | - | - | 200 | ||||||
Interest earned from cash held by trading entities | 139 | 110 | 227 | ||||||
Net cash consumed by investing activities | (2,728)
| (1,649)
| (3,384) | ||||||
Dividends paid | - | (1,692) | (2,229) | ||||||
Dividends paid to non controlling interest | (302) | (217) | (577) | ||||||
Subsidiaries' sale of own shares to minorities | 2 | 10 | 397 | ||||||
Repayment of finance leases | (27) | (16) | (32) | ||||||
Inception of bank loans | 355 | 3,421 | 3,703 | ||||||
Repayment of bank loans | (365) | (1,370) | (5,583) | ||||||
Interest paid | (139) | (140) | (299) | ||||||
Net cash consumed from financing activities | (476)
| (4)
| (4,620) | ||||||
Net (decrease) / increase in cash and cash equivalents | (14,054)
| (2,562)
| 15,651 | ||||||
Cash and cash equivalents at the beginning of the period | 31,388 | 15,111 | 15,111 | ||||||
Effect of exchange rate changes | 86 | 260 | 626 | ||||||
Cash and cash equivalents at the end of the period | 17,420
| 12,809
| 31,388 | ||||||
1. GENERAL INFORMATION
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 Stock Exchange.
This consolidated half-yearly financial information was approved for issue on20 September 2011.
These results do not constitute the Group's statutory accounts. The information presented in relation to 31 December 2010 is extracted from the statutory financial statements for the year then ended and which have been delivered to the Registrar of Companies. The auditor's report on the statutory financial statements for the year ended 31 December 2010 was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report(s) and did not contain statements under Section 498 (2) or (3) of the Companies Act 2006.
2. Basis of preparation
This consolidated half-yearly financial information for the half-year ended 30 June 2011 has been prepared in accordance with the AIM Rules for companies. The half-yearly consolidated financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2010.
3. Accounting policies
The financial information in these interim results is that of the holding company and all of its subsidiaries (the Group). It has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards as adopted for use in the EU (IFRSs). The accounting policies applied by the Group in this financial information are the same as those applied by the Group in its financial statements for the year ended 31 December 2010 and which will form the basis of the 2011 financial statements, except as described below.
The Group has decided to cease using its new offices segment, and create a new Middle East and Africa segment. Our 2010 comparatives reflect this change.
4. Earnings per share and reconciliation between headline and statutoryresults
Six months ended30 June 2011 | Reported results | Amortisation of acquired intangibles | Fair value adjustments to minority put option liabilities | Revised estimate of contingent consideration | Headline & Segmental results |
| ||
| £000 | £000 | £000 | £000 | £000 |
| ||
Revenue | 71,906 | - | - | - | 71,906 |
| ||
|
|
|
|
|
|
| ||
Operating profit | 7,502 | 292 | - | (158) | 7,636 |
| ||
Share of results of associates | 105 | - | - | - | 105 |
| ||
Finance income | 171 | - | - | - | 171 |
| ||
Finance expense | (709) | - | 538 | - | (171) |
| ||
Profit before taxation | 7,069 | 292 | 538 | (158) | 7,741 |
| ||
Taxation | (2,395) | (83) | - | - | (2,478) |
| ||
Profit after taxation | 4,674 | 209 | 538 | (158) | 5,263 |
| ||
Non controlling interest | (829) | - | - | - | (829) |
| ||
Profit attributable to equity holders of the Group | ||||||||
| 3,845 | 209 | 538 | (158) | 4,434 |
| ||
| ||||||||
BASIC EARNINGS PER SHARE | ||||||||
| ||||||||
Weighted average number of shares (thousands) | 61,992 |
|
|
| 61,992 |
| ||
BASIC EPS | 6.20p |
|
|
| 7.15p |
| ||
| ||||||||
Diluted earnings per share | ||||||||
| ||||||||
Weighted average number of shares (thousands) as above | 61,992 |
|
|
| 61,992 |
| ||
Add |
| |||||||
- UK growth shares | 818 | 818 |
| |||||
- Float options | 128 | 128 |
| |||||
- LTIP options | 307 | 307 |
| |||||
Total | 63,245 |
|
|
| 63,245 |
| ||
DILUTED EARNINGS PER SHARE | 6.08p |
|
|
| 7.01p |
| ||
Six months ended30 June 2010 | Reported results | Amortisation of acquired intangibles | Fair value adjustments to minority put option liabilities | Revaluation of call option | Headline & Segmental results |
| ||
| £000 | £000 | £000 | £000 | £000 |
| ||
Revenue | 58,227 | - | - | - | 58,227 |
| ||
|
|
|
|
|
|
| ||
Operating profit | 6,139 | 120 | - | - | 6,259 |
| ||
Share of results of associates | 31 | - | - | - | 31 |
| ||
Finance income | 127 | - | - | - | 127 |
| ||
Finance expense | (1,456) | - | 1,299 | (6) | (163) |
| ||
Profit before taxation | 4,841 | 120 | 1,299 | (6) | 6,254 |
| ||
Taxation | (2,232) | (19) | - | - | (2,251) |
| ||
Profit after taxation | 2,609 | 101 | 1,299 | (6) | 4,003 |
| ||
Non controlling interest | (8) | - | - | - | (8) |
| ||
Profit attributable to equity holders of the Group | ||||||||
| 2,601 | 101 | 1,299 | (6) | 3,995 |
| ||
| ||||||||
BASIC EARNINGS PER SHARE | ||||||||
| ||||||||
Weighted average number of shares (thousands) | 61,572 |
|
|
| 61,572 |
| ||
BASIC EPS | 4.22p |
|
|
| 6.49p |
| ||
| ||||||||
Diluted earnings per share | ||||||||
| ||||||||
Weighted average number of shares (thousands) as above | 61,572 |
|
|
| 61,572 |
| ||
Add |
| |||||||
- UK growth shares | 976 | 976 |
| |||||
- Float options | 128 | 128 |
| |||||
- LTIP options | 929 | 929 |
| |||||
Total | 63,605 |
|
|
| 63,605 |
| ||
DILUTED EARNINGS PER SHARE | 4.09p |
|
|
| 6.28p |
| ||
Year ended31 December 2010 | Reported results | Amortisation of acquired intangibles | Fair value adjustments to minority put option liabilities | Headline & Segmental results | ||||||
| £000 |
| £000 |
| £000 |
| £000 | |||
Revenue | 125,144 | - | - | 125,144 | ||||||
|
|
|
|
|
|
|
| |||
Operating profit | 12,675 | 617 | - | 13,292 | ||||||
Share of results of associates | 61 | - | - | 61 | ||||||
Finance income | 227 | - | - | 227 | ||||||
Finance expense | (5,151) | - | 4,852 | (299) | ||||||
Profit before taxation | 7,812 | 617 | 4,852 | 13,281 | ||||||
Taxation | (4,739) | (168) | - | (4,907) | ||||||
Profit after taxation | 3,073 | 449 | 4,852 | 8,374 | ||||||
Non controlling interest | (513) | - | - | (95) | - | (608) | ||||
Profit attributable to equity holders of the Group |
| |||||||||
| 2,560 | 449 | 4,757 | 7,766 | ||||||
BASIC EARNINGS PER SHARE |
| |||||||||
Weighted average number of shares (thousands) | 61,667 |
|
|
|
|
| 61,667 | |||
BASIC EPS | 4.15p |
|
|
|
|
| 12.59p | |||
Diluted earnings per share |
| |||||||||
Weighted average number of shares (thousands) as above | 61,667 |
|
|
|
|
| 61,667 | |||
Add | ||||||||||
- UK growth shares | 890 | 890 | ||||||||
- Float options | 128 | 128 | ||||||||
- LTIP options | 667 | 667 | ||||||||
Total | 63,352 |
|
|
|
|
| 63,352 | |||
DILUTED EARNINGS PER SHARE | 4.04p |
|
|
|
|
| 12.26p | |||
5. SEGMENTAL INFORMATION
This segmental information is reconciled to the statutory results in Note 4.
Six months to 30 June 2011 | UK | Europe | Middle East & Africa | Asia & Australasia | Americas | Clear | Total | |
£000 | £000 | £000 | £000 | £000 | £000 | £000 | ||
REVENUE | 31,366 | 6,609 | 1,137 | 23,641 | 2,978 | 6,175 | 71,906 | |
|
|
|
|
|
|
|
| |
OPERATING PROFIT EXCLUDING GROUP COSTS | 6,520 | 851 | (26) | 1,335 | (96) | 1,231 | 9,815 | |
Group costs | (1,952) | (34) | - | (159) | (34) | - | (2,179) | |
Operating profit | 4,568 | 817 | (26) | 1,176 | (130) | 1,231 | 7,636 | |
Share of result of associate | - | 118 | (13) | - | - | - | 105 | |
Finance income | 95 | 5 | 2 | 66 | - | 3 | 171 | |
Finance costs | (97) | (28) | - | (31) | (15) | - | (171) | |
profit before Taxation | 4,566 | 912 | (37) | 1,211 | (145) | 1,234 | 7,741 | |
Taxation | (1,381) | (219) | (16) | (441) | (14) | (407) | (2,478) | |
Profit for the period | 3,185 | 693 | (53) | 770 | (159) | 827 | 5,263 | |
Non controlling interest | (286) | (167) | 43 | (352) | (3) | (64) | (829) | |
Profit attributable to Equity holders of the Group | 2,899 | 526 | (10) | 418 | (162) | 763 | 4,434 | |
Headline BASIC EPS | 7.15p | |||||||
COSTS INCLUDED IN OPERATING PROFIT | ||||||||
Depreciation and amortisation of software | 375 | 131 | 35 | 320 | 29 | 61 | 951 | |
Share option charges | 402 | - | - | 59 | 2 | - | 463 | |
Office location | London | ParisBerlin Madrid GenevaMilanMoscow
| BeirutCape Town Johannesburg
| Sydney Melbourne Auckland WellingtonKuala LumpurNew Delhi MumbaiHong Kong ShanghaiTokyo | Los AngelesNew YorkSao Paulo | London Amsterdam New YorkHong KongSingaporeSydney | ||
Six months to 30 June 2010 | UK | Europe | Middle East & Africa | Asia & Australasia | Americas | Clear | Total | |
£000 | £000 | £000 | £000 | £000 | £000 | £000 | ||
REVENUE | 25,266 | 5,257 | 95 | 20,539 | 1,718 | 5,352 | 58,227 | |
|
|
|
|
|
|
|
| |
OPERATING PROFIT EXCLUDING GROUP COSTS | 5,296 | 591 | (342) | 1,613 | (103) | 1,193 | 8,248 | |
Group costs | (1,764) | (37) | - | (180) | (8) | - | (1,989) | |
Operating profit | 3,532 | 554 | (342) | 1,433 | (111) | 1,193 | 6,259 | |
Share of result of associate | - | 31 | - | - | - | - | 31 | |
Finance income | 61 | 2 | 2 | 58 | 1 | 3 | 127 | |
Finance costs | (112) | (29) | - | (12) | (10) | - | (163) | |
profit before Taxation | 3,481 | 558 | (340) | 1,479 | (120) | 1,196 | 6,254 | |
Taxation | (1,081) | (190) | - | (548) | (85) | (347) | (2,251) | |
Profit for the period | 2,400 | 368 | (340) | 931 | (205) | 849 | 4,003 | |
Non controlling interest | (26) | (89) | 170 | (92) | 31 | (2) | (8) | |
Profit attributable to Equity holders of the Group | 2,374 | 279 | (170) | 839 | (174) | 847 | 3,995 | |
Headline BASIC EPS | 6.49p | |||||||
COSTS INCLUDED IN OPERATING PROFIT | ||||||||
Depreciation and amortisation of software | 261 | 116 | 17 | 304 | 13 | 66 | 777 | |
Share option charges | 146 | - | - | 38 | 1 | - | 185 | |
Office location | London | ParisBerlin MadridGenevaMilan | BeirutCape Town Johannesburg
| Sydney Melbourne Auckland WellingtonKuala LumpurNew Delhi MumbaiHong Kong ShanghaiGuangzhouTokyo | Los AngelesNew YorkSao Paulo | London Amsterdam New YorkHong Kong Sydney | ||
As Middle East & Africa is a new segment we have reanalysed this data to give the correct comparative.
Year to31 December 2010 | UK | Europe | Middle East & Africa | Asia & Australasia | Americas | Clear | Total | ||
£000 | £000 | £000 | £000 | £000 | £000 | £000 | |||
REVENUE | 53,700 | 11,580 | 604 | 44,115 | 4,107 | 11,038 | 125,144 | ||
|
|
|
|
|
|
|
| ||
OPERATING PROFIT EXCLUDING GROUP COSTS | 10,997 | 1,573 | (690) | 3,630 | (249) | 1,976 | 17,237 | ||
Group costs | (3,498) | (73) | - | (364) | (10) | - | (3,945) | ||
Operating profit | 7,499 | 1,500 | (690) | 3,266 | (259) | 1,976 | 13,292 | ||
Share of result of associate | - | 48 | 13 | - | - | - | 61 | ||
Finance income | 84 | 3 | 4 | 131 | 2 | 3 | 227 | ||
Finance costs | (176) | (62) | - | (34) | (27) | - | (299) | ||
profit before Taxation | 7,407 | 1,489 | (673) | 3,363 | (284) | 1,979 | 13,281 | ||
Taxation | (2,443) | (549) | (22) | (1,171) | (123) | (599) | (4,907) | ||
Profit for the period | 4,964 | 940 | (695) | 2,192 | (407) | 1,380 | 8,374 | ||
Non controlling interest | (179) | (329) | 382 | (494) | 70 | (58) | (608) | ||
Profit attributable to Equity holders of the Group | 4,785 | 611 | (313) | 1,698 | (337) | 1,322 | 7,766 | ||
Headline BASIC EPS | 12.59p | ||||||||
COSTS INCLUDED IN OPERATING PROFIT | |||||||||
Depreciation and amortisation of software | 576 | 184 | 54 | 590 | 38 | 130 | 1,572 | ||
Share option charges | 452 | 10 | - | 53 | 2 | - | 517 | ||
Office location | London | ParisBerlin Madrid GenevaMilan | BeirutCape Town Johannesburg
| Sydney Melbourne Auckland WellingtonKuala LumpurNew Delhi MumbaiHong Kong ShanghaiGuangzhouTokyo | Los AngelesNew YorkSao Paulo | London Amsterdam New YorkHong Kong Sydney | |||
As Middle East & Africa is a new segment we have reanalysed this data to give the correct comparative.
6. Finance Income
Six monthsended30 June 2011 | Six monthsended30 June 2010 | Year ended31 December2010 | ||||||
£000 | £000 | £000 | ||||||
Bank interest receivable | 150 | 114 | 226 | |||||
Other interest receivable | 21 | 13 | 1 | |||||
Total | 171 | 127 | 227 | |||||
7. Finance COsts
Six monthsended30 June 2011 | Six monthsended30 June 2010 | Year ended31 December2010 | ||||||
£000 | £000 | £000 | ||||||
Finance costs | ||||||||
Bank interest payable | (146) | (139) | (299) | |||||
Other interest payable | (25) | (24) | - | |||||
Total interest payable | (171) | (163) | (299) | |||||
Revaluation of call option | - | 6 | - | |||||
Fair value adjustments to minority shareholder put option liabilities | (538) | (1,299) | (4,852) | |||||
Total | (709) | (1,456) | (5,151) | |||||
8. Taxation
Income tax expenses are recognised based on management's estimate of the average annual income tax expected for the full financial year.
The estimated effective annual tax rate for the period to 30 June 2011 is 33.9% (30 June 2010: 46.1%).
The headline effective annual tax rate (excluding associates) used for the period to 30 June 2011 is 32.5% (30 June 2010: 36.2%).
The decrease in the headline tax rate to closer to our long term levels is due to a reduction in our organic start losses, with some companies now making a profit and utilising their historic tax losses. Our present and long term tax rate has further been reduced by the reduction in UK corporation tax.
The difference between the headline and statutory tax rates is caused by a difference in the profit before tax due to the impact of fair value adjustments to minority shareholder put option liabilities has no effect on the tax charge.
9. Dividends
Six monthsended30 June 2011 | Six monthsended30 June 2010 | Year ended31 December2010 |
| ||||||
£000 | £000 | £000 |
| ||||||
| |||||||||
| |||||||||
2010 interim dividend 0.87p - (2009 0.87p) | - | - | 537 |
| |||||
2009 second interim dividend none - (2009 2.75p) | - | 1,682 | 1,682 | ||||||
2010 final dividend 3.03p* (2009 none) | - | - | - |
| |||||
| |||||||||
- | 1,682 | 2,219 |
| ||||||
\* The 2010 final dividend of £1,895k (3.03p per share) was paid in July 2011 and therfore is not included in the statement of changes in equity for the period to 30 June 2011.
The directors propose an interim dividend of 1.00p per share (2010: 0.87p per share) payable on 18 November 2011 to shareholders who are on the register at 4 November 2011. This interim dividend, amounting to £626k (2010: £537k) has not been recognised as a liability in this half-yearly financial report.
10. Changes to Put Options
New issue of put options
During the period equity was issued in the following subsidary enterprises, the equity has the right to be put into M&C Saatchi plc:-
Company | Year | % of Company shares / partnership interest exchangeable | |||||
Clear Ideas Consulting LLP* | 2015 | 12.5% | |||||
Clear Ideas Consulting LLP* | 2016 | 12.5% | |||||
M&C Saatchi Brazil Participações LTDA | 2017 | 40.0% | |||||
M&C Saatchi UK PR LLP | 2015 | 35.0% | |||||
\* This is a share in capital above its present value
Revised put options
The following put option agreements have been revised:-
Company | Year | % of Company shares exchangeable | |||||
M&C Saatchi GAD SAS** | 2012 | 19.4% | |||||
M&C Saatchi GAD SAS** | 2014 | 19.4% | |||||
M&C Saatchi Brazil Cominicação LTDA*** | 2017 | 9.9% | |||||
** Some of the M&C Saatchi GAD SAS shareholders have agreed to delay their right to put their shares by between one and three years, in return, the fair market value formula has been revised to reflect the Group multiple as well as a minimum value per share.
*** As part of the reorganization of Brazil the put option exercise date has been delayed by two years and the formula adjusted.
Deleted put option
The following put option was deleted as part of the Brazil reorganisation.
Company | Year | % of Company shares exchangeable | |||||
M&C Saatchi Brazil ParticipaçõesLTDA*** | 2015 | 10.1% | |||||
11. Cash generated from operations
Six monthsended30 June 2011 | Six monthsended30 June 2010 | Yearended31 December2010 | |||||||
£000 | £000 | £000 | |||||||
Revenue | 71,906 | 58,227 | 125,144 | ||||||
Operating cost | (64,404) | (52,088) | (112,469) | ||||||
Operating Profit | 7,502 | 6,139 | 12,675 | ||||||
Adjustments for: | |||||||||
Depreciation of plant and equipment | 885 | 722 | 1,460 | ||||||
Losses on sale of plant and equipment | - | 2 | 141 | ||||||
Impairment and amortisation on acquired intangible assets | 292 | 120 | 617 | ||||||
Amortisation of capitalised software intangible assets | 66 | 55 | 112 | ||||||
Non-cash share based incentive plans | 456 | 185 | 517 | ||||||
Operating cash flow before movements in working capital and provisions | 9,201
| 7,223
| 15,522 | ||||||
Decrease / (increase) in trade and other receivables | 12,599 | (5,302) | (27,760) | ||||||
(Decrease) / increase in trade and other payables | (31,562) | (694) | 40,529 | ||||||
Net cash (outflow) / inflow from operating activities | (9,762) | 1,227 | 28,291 | ||||||
12. Cash consumed by acquisitions
Six monthsended30 June 2011 | Six monthsended30 June 2010 | Year ended31 December2010 | |||||||
£000 | £000 | £000 | |||||||
Acquisitions | |||||||||
Initial cash consideration paid | (1,598) | (2,629) | (2,378) | ||||||
Cash and cash equivalents acquired | - | 1,104 | 1,098 | ||||||
Total payments made in the period relating to acquisitions | (1,598) | (1,525) | (1,280) | ||||||
Related Shares:
M&C Saatchi