24th Sep 2009 07:00
M&C SAATCHI PLC
INTERIM RESULTS
SIX MONTHS TO
30TH JUNE 2009
24TH September 2009
GROUP HIGHLIGHTS
Total revenues of £49.8m (2008: £51.8m)
Headline operating profit £5.5m (2008: £7.7m)
Headline profit before tax £5.4m (2008: £8.0m)
Headline basic earnings per share 5.27p (2008: 8.62p)
Interim dividend held at 0.87p
The headline results referred to above are stated before accounting for the amortisation and impairment of acquired intangibles (including goodwill), the fair value adjustment to minority put option liabilities and notional interest on contingent consideration.
The reconciliation of the difference between the headline results and the reported results (shown on page 7) is set out in note 4 on page 16. The like-for-like revenue comparisons referred to in this report are stated after excluding the impact of foreign currency movements and of discontinued operations.
Commenting on the results, David Kershaw, the Chief Executive, said:
"We are pleased to report that M&C Saatchi continues to perform well in a very challenging market. Group trading has stabilised against the second half of last year and the business remains in good shape with strong cash flows and balance sheet.
"As always, we remain focused on providing a great service to our clients, winning new business and managing costs. Where the possibility exists for significant returns, we will continue to invest in order to provide the basis for future growth. Accordingly, we have opened three new offices this year and we are also extending our current brands into new markets.
"The outlook for the full year remains in line with management expectations."
For further information please call:
|
M&C Saatchi |
020-7543-4500 |
|
David Kershaw |
|
|
Tulchan Communications |
020-7353-4200 |
|
Susanna Voyle |
|
|
Tom Rayner |
|
|
Numis Securities |
020-7260-1000 |
|
Lee Aston, NOMAD |
|
|
Charles Farquhar, corporate broking |
SUMMARY OF RESULTS
Overview
The Board of M&C Saatchi plc announces the unaudited results for the six months ending 30 June 2009.
In the first six months of 2009 our clients have faced unprecedented pressure to reduce costs and improve efficiency in the face of the current economic climate. This has impacted both revenue and profitability. Given this backdrop, we are pleased with these results. The business is in good shape, our clients remain loyal and the balance sheet and cash flows are strong. The environment, however, remains difficult and we are focused on managing costs and responding to the challenges that the industry is facing and, despite the depressed conditions, will continue to invest in the future.
The Group is reporting a revenue reduction of 3.8% to £49.8m (2008: £51.8m) and on a like-for-like basis, eliminating the positive impact of exchange rate movements on the overseas revenue, the reduction is 7.5%.
The headline operating profit is down by 28.4% to £5.5m (2008: £7.7m). The headline operating margin has declined to 11.1% (2008: 14.9%).
We have continued with our stated strategy of investing in new geographies and new businesses that we believe are important drivers for future growth. This year we have opened new offices in Geneva, Sao Paulo and Tokyo and the early signs are promising. The expectation is that these businesses will incur losses in the first two years of operation and the impact on this period's results has been, as planned, a revenue contribution of £0.2m and an operating loss of £0.6m. Excluding this investment, the headline operating margin for the Group was 12.3%.
Managing costs is a key focus for the Group. The reported results show a revenue decrease of 3.8% compared to an overall cost increase of 0.5% and hence the operating margin decline. The overall cost increase is due to the costs incurred (£0.7m) opening the three new offices. Excluding these costs there was a net year on year decrease of 1.2%.
The contribution from the Group's associate in Spain was a loss of £0.1m (2008: £0.1m loss) and reflects the continued difficult trading conditions in that country.
The Group incurred a net interest charge of £0.1m, compared to a net contribution of £0.3m last year. This was principally due to a tighter working capital environment.
The Group's tax rate has increased to 34.5% (2008: 31.7%), due to the unutilised losses trapped in the new offices.
The profits attributable to the Group's minorities decreased by 16% to £0.26m (2008: £0.31m).
The weighted average number of shares increased to 60.9m from the position at the end of 2008 (60.0m) as a result of shares issued to satisfy the acquisition of the Group's minority in Talk PR and M&C Saatchi Sports and Entertainment. The number of shares in issue at the 30 June 2009 was 61.5m.
The net result of all of the above was that the headline basic earning per share decreased to 5.27p (2008: 8.62p).
The board is recommending that we hold the interim dividend at 0.87p per share.
Cash Flow and Group Debt.
At 30 June 2009 the Group had net debt of £0.4m. Cash balances across the Group stood at £4.5m down from £9.3m at end of 2008, and we were utilising £4.9m of the three-year facility provided by RBS which continues until 2011.
During the period the Group generated free cash flow of £3.8m. There was a working capital outflow of £6.0m and a debt repayment of £1.7m. The Group paid £0.3m acquiring some of its minority interests (The detail is set out in note 11 to the interim accounts). Other net outflows including exchange revaluations totalled £0.6m. The total net outflow was £4.8m.
REVIEW OF OPERATIONS
UK
Trading in the UK is tough in comparison to previous years. Clients started to reduce communication budgets in the face of the economic headwinds in the last quarter of 2008, but we saw little impact on fees. In 2009 we are seeing significant pressure being applied to fees to reflect the reduction in activity. Revenue declined by 6% to £23.8m (2008: £25.2m) and the headline operating profit declined to £5.0m (2008: £5.8m). Excluding the impact of the Group recharges the headline operating margin declined to 21.1% (2008: 23.1%).
We are monitoring costs carefully; focusing on maintaining margin whilst being careful to maintain sufficient resource to properly service clients. In spite of the drop compared to last year, the headline operating margin of our UK business remains healthy. Nevertheless we are taking steps to reduce our variable costs which have been reduced by 3.3% compared to the same period last year and we will continue to focus on costs as future revenue levels become clearer.
Important new revenue in this period came from the Department of Health's "Change 4 Life" anti obesity campaign, which was won last year, as well as assignments from Boots (Boots Advantage Card), The Carphone Warehouse, Castrol (sports sponsorship) and for the State of Georgia.
Clear
Clear's project-based business was the first to be seriously affected by the economic downturn. Revenue declined significantly in the fourth quarter of 2008, but has since shown resilience and revenue in the first half of this year is 9% above the second half 2008.
Costs have been reduced by 15% compared with the levels in the first half of last year and while the margin has fallen compared with last year's level of 27.2%, it remains healthy at 19.6%.
Europe
It is as tough in continental Europe as it is in the UK. There are few new business opportunities and clients are cutting activity and looking for fee reductions. The weakness of sterling is the cause of the reported revenue increase of 9.7% to £4.5m (2008: £4.1m). Using constant rates the revenue has reduced by 4.9%.
Again, using constant rates, the costs across our two offices has increased by 1.7% and that reflects the growth of the Paris office prior to the downturn. There are few short-term cost savings to be achieved due to employment legislation, particularly in France, but if the recession persists further action will be taken to manage the margin which has declined to 9.9% (2008: 12.4%).
Asia and Australia
A comparatively strong performance from this region. On a like-for-like basis, excluding the impact of the offices closed last year and using constant exchange rates, revenue has increased by 1.5%.
Australia had a good first six months with a like-for-like revenue increase of 7%. Important new assignments have come from Freedom Furniture, Mitre 10, KR Castlemaine and Deacons. The offices in Greater China (Hong Kong and Shanghai) are also gaining momentum, reporting a like-for-like revenue increase of 9%.
Elsewhere in the region it is more difficult. Revenue was flat in Malaysia and there were declines in New Zealand and India.
The headline operating profit increase of 56% includes the benefit of eliminating the 0.5m losses incurred in Thailand and Singapore last year. Excluding this effect, the headline operating profit remained flat at £1.6m and the headline operating margin declined marginally to 11.5% (2008: 12.3%).
America
Our office in Los Angeles was one of the first to suffer from the economic downturn and it remains difficult. On a like-for-like basis revenue declined by 36%. Clients have continued to reduce spend and Ketel One, an important and valued client, was lost following the sale of the brand to Diageo.
New Offices
As we reported in March, in spite of the difficult trading environment we have been pursuing opportunities to expand organically by opening new businesses and extending existing businesses into new markets.
We opened new offices in Geneva in February, Sao Paulo in March and Tokyo in August. It is still very early in their life cycle but they are trading in line with expectations.
During the period the new offices contributed £0.2m of new revenue and incurred an operating loss of £0.6m.
Outlook
The outlook for the full year remains in line with management expectations.
In the current environment long-term forecasting is difficult, but what we can see suggests that conditions will remain depressed for the medium term as long as the budget outlook for our clients remains uncertain.
We believe however the Group is in good shape. Resource levels are being tightly managed, the balance sheet is strong, and we will continue to seek further opportunities to provide the basis for future growth.
This report comments on the unaudited consolidated income statement of M&C Saatchi plc (the "Group") for the six months to 30 June 2009 compared with unaudited consolidated income statement for the same period in 2008. The report also comments on the numbers before the impact of fair value adjustments to minority shareholder put option liabilities and amortisation and impairment of intangible assets (headline numbers).
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED INCOME STATEMENT
AT 30 JUNE 2009
|
Six months ended 30 June 2009 |
|
Six months ended 30 June 2008 |
|
Year ended 31 December 2008 |
|||||
|
Note |
£000 |
|
£000 |
|
£000 |
||||
|
Billings |
174,622 |
222,753 |
436,506 |
||||||
|
Revenue |
4 |
49,801 |
51,769 |
104,383 |
|||||
|
Operating costs |
(44,339) |
(44,514) |
(93,617) |
||||||
|
Operating profit |
4 |
5,462 |
7,255 |
10,766 |
|||||
|
Share of results of associates |
(107) |
(114) |
(81) |
||||||
|
Impairment of associate |
- |
- |
(2,400) |
||||||
|
Finance income |
6 |
564 |
978 |
3,350 |
|||||
|
Finance costs |
7 |
(198) |
(572) |
(1,142) |
|||||
|
Profit before taxation |
4 |
5,721 |
7,547 |
10,493 |
|||||
|
Taxation on profits |
8 |
(1,865) |
(2,470) |
(3,904) |
|||||
|
Profit for the financial period |
3,856 |
5,077 |
6,589 |
||||||
|
Profit attributable to: |
|||||||||
|
Equity shareholders of the Group |
4 |
3,593 |
4,763 |
6,021 |
|||||
|
Minority interests |
263 |
314 |
568 |
||||||
|
3,856 |
5,077 |
6,589 |
|||||||
|
Earnings per share |
4 |
||||||||
|
Basic |
5.90p |
8.06p |
10.04p |
||||||
|
Diluted |
5.75p |
7.50p |
9.75p |
||||||
|
Headline results |
4 |
||||||||
|
Operating profit |
5,527 |
7,721 |
13,739 |
||||||
|
Profit before tax |
5,357 |
7,962 |
14,095 |
||||||
|
Profit attributable to equity shareholders |
3,210 |
5,096 |
9,024 |
||||||
|
HEADLINE Earnings per share |
4 |
||||||||
|
Basic |
5.27p |
8.62p |
15.05p |
||||||
|
Diluted |
5.14p |
8.02p |
14.62p |
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
AT 30 JUNE 2009
|
Six months ended 30 June 2009 |
|
Six months ended 30 June 2008 |
|
Year ended 31 December 2008 |
|||||
|
£000 |
|
£000 |
|
£000 |
|||||
|
Profit for the period |
3,856 |
5,077 |
6,589 |
||||||
|
Other comprehensive income: |
|||||||||
|
Exchange differences on translating foreign operations before tax |
(990) |
566 |
2,403 |
||||||
|
Tax benefit / (expense) |
135 |
(103) |
(311) |
||||||
|
Other comprehensive income for the period net of tax |
(855) |
463 |
2,092 |
||||||
|
Total comprehensive income for the period |
3,001 |
5,540 |
8,681 |
||||||
|
Total comprehensive income attributable to: |
|||||||||
|
Equity shareholders of the Company |
2,802 |
5,222 |
7,952 |
||||||
|
Minority interests |
199 |
318 |
729 |
||||||
|
3,001 |
5,540 |
8,681 |
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2009
|
30 June 2009 |
30 June 2008 |
31 December 2008 |
|||||||
|
£000 |
£000 |
£000 |
|||||||
|
NON CURRENT ASSETS |
|||||||||
|
Intangible assets |
58,209 |
63,568 |
58,114 |
||||||
|
Investments in associates |
1,585 |
4,098 |
1,711 |
||||||
|
Plant and equipment |
3,977 |
3,943 |
4,239 |
||||||
|
Deferred tax assets |
1,919 |
2,078 |
1,924 |
||||||
|
Other non current assets |
1,543 |
544 |
707 |
||||||
|
67,233 |
74,231 |
66,695 |
|||||||
|
CURRENT ASSETS |
|||||||||
|
Trade and other receivables |
49,581 |
64,088 |
60,784 |
||||||
|
Current tax assets |
781 |
206 |
649 |
||||||
|
Cash and cash equivalents |
4,470 |
1,980 |
9,271 |
||||||
|
54,832 |
66,274 |
70,704 |
|||||||
|
CURRENT LIABILITIES |
|||||||||
|
Trade and other payables |
(57,197) |
(70,360) |
(73,583) |
||||||
|
Current tax liabilities |
(2,778) |
(1,904) |
(3,030) |
||||||
|
Other financial liabilities |
(3) |
(13) |
(37) |
||||||
|
Deferred and contingent consideration |
(229) |
(112) |
(116) |
||||||
|
Minority shareholder put options liabilities |
(508) |
(1,983) |
(1,881) |
||||||
|
(60,715) |
(74,372) |
(78,647) |
|||||||
|
Net current liabilities |
(5,883) |
(8,098) |
(7,943) |
||||||
|
Total assets less current liabilities |
61,350 |
66,133 |
58,752 |
||||||
|
Non current liabilities |
|||||||||
|
Deferred tax liabilities |
(924) |
(1,526) |
(928) |
||||||
|
Other financial liabilities |
(4,861) |
(7,468) |
(6,702) |
||||||
|
Deferred and contingent consideration |
- |
(4,917) |
- |
||||||
|
Minority shareholder put options liabilities |
(1,824) |
(3,268) |
(1,816) |
||||||
|
Other non current liabilities |
(524) |
(1,344) |
(483) |
||||||
|
(8,133) |
(18,523) |
(9,929) |
|||||||
|
Net assets |
53,217 |
47,610 |
48,823 |
||||||
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED BALANCE SHEET (CONTINUED)
AT 30 JUNE 2009
|
30 June 2009 |
30 June 2008 |
31 December 2008 |
|||||||
|
£000 |
£000 |
£000 |
|||||||
|
Equity |
|||||||||
|
Equity attributable to shareholders of the parent |
|||||||||
|
Share capital |
622 |
610 |
615 |
||||||
|
Share premium |
12,758 |
12,758 |
12,758 |
||||||
|
Merger reserve |
22,257 |
21,685 |
21,777 |
||||||
|
Treasury reserve |
(792) |
(792) |
(792) |
||||||
|
Minority interest put option reserve |
(4,062) |
(4,436) |
(4,463) |
||||||
|
Foreign exchange reserve |
1,458 |
777 |
2,249 |
||||||
|
Retained earnings |
20,110 |
16,552 |
15,869 |
||||||
|
Total shareholders' equity |
52,351 |
47,154 |
48,013 |
||||||
|
Minority interestS |
866 |
456 |
810 |
||||||
|
TOTAL EQUITY |
53,217 |
47,610 |
48,823 |
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
SIX MONTHS ENDED 30 JUNE 2009
|
Share capital |
Share premium |
Merger reserve |
Treasury reserve |
Minority interest put option reserve |
Translation of foreign operations |
Retained earnings |
Subtotal |
Minority interests |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
31 December 2007 |
597 |
12,758 |
20,285 |
(792) |
(6,876) |
318 |
9,053 |
35,343 |
555 |
35,898 |
|
Reserve movements for the Year ending 31 December 2008 |
||||||||||
|
Issue of shares for acquisitions |
18 |
- |
1,925 |
- |
- |
- |
- |
1,943 |
- |
1,943 |
|
Repayment of minority share capital |
- |
- |
- |
- |
- |
- |
- |
- |
(19) |
(19) |
|
Exercise of minority put options |
- |
- |
- |
- |
2,413 |
- |
2,657 |
5,070 |
(19) |
5,051 |
|
Transfer to majority reserves |
- |
- |
- |
- |
- |
- |
(212) |
(212) |
212 |
- |
|
Transfer of reserves |
- |
- |
(433) |
- |
- |
- |
433 |
- |
- |
- |
|
Equity settled share based payments |
- |
- |
- |
- |
- |
- |
104 |
104 |
- |
104 |
|
Dividends |
- |
- |
- |
- |
- |
- |
(2,187) |
(2,187) |
(648) |
(2,835) |
|
Total comprehensive income for the year |
- |
- |
- |
- |
- |
1,931 |
6,021 |
7,952 |
729 |
8,681 |
|
31 December 2008 |
615 |
12,758 |
21,777 |
(792) |
(4,463) |
2,249 |
15,869 |
48,013 |
810 |
48,823 |
|
Reserve movements for the Six months ending 30 June 2009 |
||||||||||
|
Issue of shares to new minorities |
- |
- |
- |
- |
- |
- |
- |
- |
102 |
102 |
|
Issue of shares for acquisitions |
7 |
- |
480 |
- |
- |
- |
- |
487 |
- |
487 |
|
Exercise of minority put options |
- |
- |
- |
- |
401 |
- |
537 |
938 |
(57) |
881 |
|
Equity settled share based payments |
- |
- |
- |
- |
- |
- |
111 |
111 |
- |
111 |
|
Dividends |
- |
- |
- |
- |
- |
- |
- |
- |
(188) |
(188) |
|
Total comprehensive income for the period |
- |
- |
- |
- |
- |
(791) |
3,593 |
2,802 |
199 |
3,001 |
|
30 June 2009 |
622 |
12,758 |
22,257 |
(792) |
(4,062) |
1,458 |
20,110 |
52,351 |
866 |
53,217 |
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
SIX MONTHS ENDED 30 JUNE 2009
|
Share capital |
Share premium |
Merger reserve |
Treasury reserve |
Minority interest put option reserve |
Translation of foreign operations |
Retained earnings |
Subtotal |
Minority interests |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
31 December 2007 |
597 |
12,758 |
20,285 |
(792) |
(6,876) |
318 |
9,053 |
35,343 |
555 |
35,898 |
|
Reserve movements for the Six month ending 30 June 2008 |
||||||||||
|
Issue of shares for acquisitions |
13 |
- |
1,400 |
- |
- |
- |
71 |
1,484 |
- |
1,484 |
|
Exercise of minority put options |
- |
- |
- |
- |
2,440 |
- |
2,619 |
5,059 |
- |
5,059 |
|
Equity settled share based payments |
- |
- |
- |
- |
- |
- |
125 |
125 |
- |
125 |
|
Transfer between majority and minority reserves |
- |
- |
- |
- |
- |
- |
(79) |
(79) |
79 |
- |
|
Dividends |
- |
- |
- |
- |
- |
- |
- |
- |
(496) |
(496) |
|
Total comprehensive income for the period |
- |
- |
- |
- |
- |
459 |
4,763 |
5,222 |
318 |
5,540 |
|
30 June 2008 |
610 |
12,758 |
21,685 |
(792) |
(4,436) |
777 |
16,552 |
47,154 |
456 |
47,610 |
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
SIX MONTHS ENDED 30 JUNE 2009
|
Six months ended 30 June 2009 |
Six months ended 30 June 2008 |
Year ended 31 December 2008 |
|||||||
|
Notes |
£000 |
£000 |
£000 |
||||||
|
Cash generated from operations |
10 |
688 |
2,921 |
15,050 |
|||||
|
Tax paid |
(1,923) |
(2,159) |
(3,592) |
||||||
|
Net cash (Out) / In flow from operating activities |
(1,235) |
762 |
11,458 |
||||||
|
Acquisitions |
11 |
(333) |
(14,082) |
(14,156) |
|||||
|
Proceeds from sale of plant and equipment |
9 |
4 |
5 |
||||||
|
Purchase of plant and equipment |
(863) |
(627) |
(1,605) |
||||||
|
Purchase of capitalised software |
(28) |
(41) |
(100) |
||||||
|
Dividends received from associates |
- |
56 |
125 |
||||||
|
Interest earned from cash held by trading entities |
134 |
737 |
1,401 |
||||||
|
Interest received on centrally held cash |
- |
7 |
10 |
||||||
|
Net cash consumed by investing activities |
(1,081) |
(13,946) |
(14,320) |
||||||
|
Dividends paid |
- |
- |
(2,187) |
||||||
|
Minority dividends paid |
(189) |
(496) |
(648) |
||||||
|
Subsidiaries' purchase of own shares from minorities |
111 |
- |
(19) |
||||||
|
Repayment of finance leases |
(12) |
(10) |
(12) |
||||||
|
Inception of bank loans |
- |
10,722 |
12,620 |
||||||
|
Repayment of bank loans |
(1,705) |
(11,780) |
(14,703) |
||||||
|
Interest paid |
(197) |
(403) |
(974) |
||||||
|
Interest on finance leases |
- |
- |
(1) |
||||||
|
Net cash consumed from financing activities |
(1,992) |
(1,967) |
(5,924) |
||||||
|
Net decrease in cash and cash equivalents |
(4,308) |
(15,151) |
(8,786) |
||||||
|
Cash and cash equivalents at the beginning of the period |
9,271 |
16,895 |
16,895 |
||||||
|
Effect of exchange rate changes |
(493) |
236 |
1,162 |
||||||
|
Cash and cash equivalents at the end of the period |
4,470 |
1,980 |
9,271 |
||||||
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 condensed consolidated half-yearly financial information was approved for issue on 23 September 2009.
This interim report does not constitute the Group's statutory accounts. The information presented in relation to 31 December 2008 is extracted from the statutory financial statements for the year then ended and which have been delivered to the Registrar of Companies. The auditors' report on the statutory financial statements for the year ended 31 December 2008 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 S237(2) or (3) of the Companies Act 1985.
2. Basis of preparation
This condensed consolidated half-yearly financial information for the half-year ended 30 June 2009 has been prepared in accordance with the AiM Rules for companies. The half-yearly condensed consolidated financial report should be read in conjunction with the annual financial statements for the year ended 31 December 2008.
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 2008 and which will form the basis of the 2009 financial statements, except as described below.
A number of new and amended standards become effective for periods beginning on or after 1 January 2009. The principal changes that are relevant to the Group are:
IFRS 8 Operating Segments is a disclosure standard only; there has been no effect on the reported results or previous financial position of the Group. The segments reported in these interims results reflect the guidance under IFRS 8 and full note disclosures will be provided in the 2009 financial statements.
IAS 1 Presentation of Financial Statements (revised 2007) has introduced a number of terminology changes (including new titles for the condensed financial statements) and has resulted in a number of changes in presentation and disclosure. There has been no effect on the reported results or previous financial position of the Group. Full supporting note disclosures will be provided in the 2009 financial statements.
None of the other new standards and amendments is expected materially to affect the Group.
4. Earnings per share and reconciliation between headline and statutory results
|
Six months ended 30 June 2009 |
Reported results |
Amortisation of acquired intangibles & write off of goodwill |
Fair value adjustments to minority put option liabilities |
Notional interest on deferred consideration |
Headline & Segmental results |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
||
|
Revenue |
|
49,801 |
- |
- |
- |
49,801 |
|
Operating profit |
|
5,462 |
65 |
- |
- |
5,527 |
|
Share of results of associates |
(107) |
- |
- |
- |
(107) |
|
|
Finance income |
564 |
- |
(429) |
- |
135 |
|
|
Finance expense |
(198) |
- |
- |
- |
(198) |
|
|
Profit before taxation |
|
5,721 |
65 |
(429) |
- |
5,357 |
|
Taxation |
(1,865) |
(19) |
- |
- |
(1,884) |
|
|
Profit AFTER taxation |
|
3,856 |
46 |
(429) |
- |
3,473 |
|
Minority interests |
(263) |
- |
- |
- |
(263) |
|
|
Profit attributable to equity holders of the Group |
||||||
|
3,593 |
46 |
(429) |
- |
3,210 |
||
|
BASIC EARNINGS PER SHARE |
||||||
|
Weighted average number of shares (thousands) |
60,911 |
60,911 |
||||
|
BASIC EPS |
5.90p |
5.27p |
||||
|
Diluted earnings per share |
||||||
|
Weighted average number of shares (thousands) as above |
60,911 |
60,911 |
||||
|
Add |
||||||
|
- Float options |
411 |
411 |
||||
|
- LTIP options |
1,144 |
1,144 |
||||
|
Total |
62,466 |
62,466 |
||||
|
DILUTED EARNINGS PER SHARE |
5.75p |
5.14p |
||||
|
Six months ended 30 June 2008 |
Reported results |
Amortisation of acquired intangibles & write off of goodwill |
Fair value adjustments to minority put option liabilities |
Notional interest on deferred consideration |
Headline & Segmental results |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
||
|
Revenue |
|
51,769 |
- |
- |
- |
51,769 |
|
Operating profit |
|
7,255 |
466 |
- |
- |
7,721 |
|
Share of results of associates |
(114) |
14 |
- |
- |
(100) |
|
|
Finance income |
978 |
- |
(234) |
- |
744 |
|
|
Finance expense |
(572) |
- |
169 |
(403) |
||
|
Profit before taxation |
|
7,547 |
480 |
(234) |
169 |
7,962 |
|
Taxation |
(2,470) |
(82) |
- |
- |
(2,552) |
|
|
Profit AFTER taxation |
|
5,077 |
398 |
(234) |
169 |
5,410 |
|
Minority interests |
314 |
- |
- |
- |
314 |
|
|
Profit attributable to equity holders of the Group |
||||||
|
4,763 |
398 |
(234) |
169 |
5,096 |
||
|
BASIC EARNINGS PER SHARE |
||||||
|
Weighted average number of shares (thousands) |
59,085 |
59,085 |
||||
|
BASIC EPS |
8.06p |
8.62p |
||||
|
Diluted earnings per share |
||||||
|
Weighted average number of shares (thousands) as above |
59,085 |
59,085 |
||||
|
Add |
||||||
|
- Float options |
411 |
411 |
||||
|
- LTIP options |
995 |
995 |
||||
|
- Contingent consideration |
3,047 |
3,047 |
||||
|
Total |
63,538 |
63,538 |
||||
|
DILUTED EARNINGS PER SHARE |
7.50p |
8.02p |
||||
|
Year ended 31 December 2008 |
Reported results |
Amortisation of acquired intangibles |
Impairment of acquired intangibles and goodwill |
Fair value adjustments to minority put option liabilities |
Notional interest on deferred consideration |
Headline & Segmental results |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
||
|
Revenue |
|
104,383 |
- |
- |
- |
- |
104,383 |
|
Operating profit |
|
10,766 |
575 |
2,398 |
- |
- |
13,739 |
|
Impairment of associate |
(2,400) |
- |
2,400 |
- |
- |
- |
|
|
Share of results of associates |
(81) |
- |
- |
- |
- |
(81) |
|
|
Finance income |
3,350 |
- |
- |
(1,940) |
- |
1,410 |
|
|
Finance expense |
(1,142) |
- |
- |
- |
169 |
(973) |
|
|
Profit before taxation |
|
10,493 |
575 |
4,798 |
(1,940) |
169 |
14,095 |
|
Taxation |
(3,904) |
(164) |
(435) |
- |
- |
(4,503) |
|
|
Profit after taxation |
|
6,589 |
411 |
4,363 |
(1,940) |
169 |
9,592 |
|
Minority interests |
568 |
- |
- |
- |
- |
568 |
|
|
Profit attributable to equity holders of the Group |
|||||||
|
6,021 |
411 |
4,363 |
(1,940) |
169 |
9,024 |
||
|
BASIC EARNINGS PER SHARE |
|||||||
|
Weighted average number of shares (thousands) |
59,972 |
59,972 |
|||||
|
BASIC EPS |
10.04p |
15.05p |
|||||
|
Diluted earnings per share |
|||||||
|
Weighted average number of shares (thousands) as above |
59,972 |
59,972 |
|||||
|
Add |
|||||||
|
- Float options |
411 |
411 |
|||||
|
- LTIP options |
1,151 |
1,151 |
|||||
|
- Contingent consideration |
205 |
205 |
|||||
|
Total |
61,739 |
61,739 |
|||||
|
DILUTED EARNINGS PER SHARE |
9.75p |
14.62p |
|||||
5. SEGMENTAL INFORMATION
This segmental information is reconciled to the statutory results in Note 4.
|
Six months to 30 June 2009 |
UK |
Europe |
Asia & Australia |
America |
New Offices |
Clear |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
||
|
REVENUE |
23,757 |
4,546 |
15,354 |
1,304 |
150 |
4,690 |
49,801 |
|
|
OPERATING PROFIT EXCLUDING GROUP COSTS |
5,016 |
469 |
1,566 |
(213) |
(579) |
921 |
7,180 |
|
|
Group costs |
(1,467) |
(20) |
(131) |
(2) |
(33) |
- |
(1,653) |
|
|
Operating profit |
3,549 |
449 |
1,435 |
(215) |
(612) |
921 |
5,527 |
|
|
Share of result of associates |
- |
(107) |
- |
- |
- |
- |
(107) |
|
|
Finance income |
65 |
7 |
57 |
1 |
- |
5 |
135 |
|
|
Finance costs |
(161) |
(35) |
(2) |
- |
- |
- |
(198) |
|
|
profit before Taxation |
3,453 |
314 |
1,490 |
(214) |
(612) |
926 |
5,357 |
|
|
Taxation |
(1,030) |
(151) |
(485) |
82 |
- |
(300) |
(1,884) |
|
|
Profit for the period |
2,423 |
163 |
1,005 |
(132) |
(612) |
626 |
3,473 |
|
|
Minority interests |
(62) |
(78) |
(167) |
20 |
24 |
- |
(263) |
|
|
Profit attributable to Equity holders of the Group |
2,361 |
85 |
838 |
(112) |
(588) |
626 |
3,210 |
|
|
Headline BASIC EPS |
5.27p |
|||||||
|
COSTS INCLUDED IN OPERATING PROFIT: |
||||||||
|
Depreciation and amortisation of software |
307 |
82 |
566 |
16 |
5 |
80 |
1,056 |
|
|
Share option charges |
86 |
- |
46 |
2 |
- |
- |
134 |
|
|
Office location |
London |
Paris Berlin Madrid |
Sydney Melbourne Auckland Wellington Kuala Lumpur New Delhi Mumbai Hong Kong Shanghai |
LA |
Sao Paulo Geneva Tokyo |
London Amsterdam New York Hong Kong |
||
|
Six months to 30 June 2008 |
UK |
Europe |
Asia & Australia |
America |
New Offices |
Clear |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
||
|
REVENUE |
25,195 |
4,145 |
14,789 |
1,541 |
- |
6,099 |
51,769 |
|
|
OPERATING PROFIT EXCLUDING GROUP COSTS |
5,810 |
534 |
1,045 |
173 |
- |
1,659 |
9,221 |
|
|
Group costs |
(1,353) |
(20) |
(126) |
(1) |
- |
- |
(1,500) |
|
|
Operating profit |
4,457 |
514 |
919 |
172 |
- |
1,659 |
7,721 |
|
|
Share of result of associates |
- |
(100) |
- |
- |
- |
- |
(100) |
|
|
Finance income |
656 |
8 |
67 |
1 |
- |
12 |
744 |
|
|
Finance costs |
(266) |
(99) |
(31) |
- |
- |
(7) |
(403) |
|
|
profit before Taxation |
4,847 |
323 |
955 |
173 |
- |
1,664 |
7,962 |
|
|
Taxation |
(1,374) |
(42) |
(567) |
(72) |
- |
(497) |
(2,552) |
|
|
Profit for the period |
3,473 |
281 |
388 |
101 |
- |
1,167 |
5,410 |
|
|
Minority interests |
(175) |
(30) |
(92) |
(17) |
- |
- |
(314) |
|
|
Profit attributable to Equity holders of the Group |
3,298 |
251 |
296 |
84 |
- |
1,167 |
5,096 |
|
|
Headline BASIC EPS |
8.62p |
|||||||
|
COSTS INCLUDED IN OPERATING PROFIT: |
||||||||
|
Depreciation and amortisation of software |
296 |
58 |
307 |
16 |
- |
84 |
761 |
|
|
Share option charges |
106 |
- |
17 |
2 |
- |
- |
125 |
|
|
Office location |
London |
Paris Berlin Madrid |
Sydney Melbourne Auckland Wellington Kuala Lumpur New Delhi Mumbai Hong Kong Shanghai Bangkok Singapore |
LA |
- |
London Amsterdam New York |
||
|
Year Ended 31 December 2008 |
UK |
Europe |
Asia & Australia |
America |
New Offices |
Clear |
Total |
||
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|||
|
REVENUE |
52,357 |
8,727 |
29,677 |
3,200 |
- |
10,422 |
104,383 |
||
|
OPERATING PROFIT EXCLUDING GROUP COSTS |
11,259 |
1,306 |
2,376 |
295 |
- |
1,905 |
17,141 |
||
|
Group costs |
3,088 |
38 |
273 |
3 |
- |
- |
3,402 |
||
|
Operating profit |
8,171 |
1,268 |
2,103 |
292 |
- |
1,905 |
13,739 |
||
|
Share of result of associates |
- |
(81) |
- |
- |
- |
- |
(81) |
||
|
Finance income |
1,180 |
45 |
162 |
2 |
- |
21 |
1,410 |
||
|
Finance costs |
(672) |
(258) |
(43) |
- |
- |
- |
(973) |
||
|
profit before Taxation |
8,679 |
974 |
2,222 |
294 |
- |
1,926 |
14,095 |
||
|
Taxation |
(2,730) |
(209) |
(871) |
(103) |
- |
(590) |
(4,503) |
||
|
Profit for the period |
5,949 |
765 |
1,351 |
191 |
- |
1,336 |
9,592 |
||
|
Minority interests |
(240) |
(182) |
(114) |
(32) |
- |
- |
(568) |
||
|
Profit attributable to Equity holders of the Group |
5,709 |
583 |
1,237 |
159 |
- |
1,336 |
9,024 |
||
|
Headline BASIC EPS |
14.62p |
||||||||
|
COSTS INCLUDED IN OPERATING PROFIT: |
|||||||||
|
Depreciation and amortisation of software |
605 |
129 |
772 |
31 |
- |
169 |
1,706 |
||
|
Share option charges |
96 |
- |
36 |
1 |
- |
- |
133 |
||
|
Office location |
London |
Paris Berlin Madrid |
Sydney Melbourne Auckland Wellington Kuala Lumpur New Delhi Mumbai Hong Kong Shanghai Bangkok Singapore |
LA |
- |
London Amsterdam New York |
|||
6. Finance Income
|
Six months ended 30 June 2009 |
Six months ended 30 June 2008 |
Year ended 31 December 2008 |
||||||
|
£000 |
£000 |
£000 |
||||||
|
Bank interest receivable |
124 |
725 |
1,247 |
|||||
|
Other interest receivable |
11 |
19 |
163 |
|||||
|
Total interest receivable |
135 |
744 |
1,410 |
|||||
|
Fair value adjustments to minority shareholder put option liabilities |
429 |
234 |
1,940 |
|||||
|
Total |
564 |
978 |
3,350 |
|||||
7. Finance expense
|
Six months ended 30 June 2009 |
Six months ended 30 June 2008 |
Year ended 31 December 2008 |
||||||
|
£000 |
£000 |
£000 |
||||||
|
Finance costs |
||||||||
|
Bank interest chargeable |
(197) |
(395) |
(925) |
|||||
|
Interest payable on finance leases |
- |
- |
(1) |
|||||
|
Other interest payable |
(1) |
(8) |
(47) |
|||||
|
Total interest payable |
(198) |
(403) |
(973) |
|||||
|
Notional interest on contingent consideration |
- |
(169) |
(169) |
|||||
|
Total |
(198) |
(572) |
(1,142) |
|||||
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 2009 is 32.6% (30 June 2008: 32.7%).
The headline effective annual tax rate (excluding associate) used for the period to 30 June 2009 is 34.5% (30 June 2008: 31.7%).
The increase in headline tax rate is due to the carried forward tax losses of our new offices in 2009.
The difference between the headline and statutory tax rates is caused by a difference in the profit before tax as neither the impact of fair value adjustments to minority shareholder put option liabilities or notional interest has any effect on the tax charge.
9. Dividends
|
Six months ended 30 June 2009 |
Six months ended 30 June 2008 |
Year ended 31 December 2008 |
||||||
|
£000 |
£000 |
£000 |
||||||
|
2008 final dividend 0.00*p (2007 2.43p) |
- |
- |
1,658 |
|||||
|
2008 interim dividend - (2007 0.87p) |
- |
- |
529 |
|||||
|
- |
- |
2,178 |
||||||
\* The 2008 final dividend of £1,683k (2.75p per share) was paid in July 2009 and therefore is not included in the income statement covering the period to 30 June 2009.
The directors propose an interim dividend of 0.87p per share (2008: 0.87p per share) payable on 19 November 2009 to shareholders who are on the register at 23 October 2009. This interim dividend, amounting to £535k (2008: £529k) has not been recognised as a liability in this half-yearly financial report.
10. Cash generated from operations
|
Six months ended 30 June 2009 |
Six months ended 30 June 2008 |
Year ended 31 December 2008 |
|||||||
|
£000 |
£000 |
£000 |
|||||||
|
Revenue |
49,801 |
51,769 |
104,383 |
||||||
|
Operating expenses |
(44,339) |
(44,514) |
(93,617) |
||||||
|
Operating Profit |
5,462 |
7,255 |
10,766 |
||||||
|
Adjustments for: |
|||||||||
|
Depreciation of plant and equipment |
1,013 |
724 |
1,631 |
||||||
|
Losses on sale of plant and equipment |
- |
13 |
15 |
||||||
|
Loss / (profit) on sale of intangible assets |
- |
(4) |
5 |
||||||
|
Impairment and amortisation on acquired intangible assets |
65 |
466 |
2,127 |
||||||
|
Impairment of goodwill |
- |
- |
846 |
||||||
|
Amortisation of capitalised software intangible assets |
42 |
37 |
75 |
||||||
|
Non-cash share based incentive plans |
134 |
125 |
133 |
||||||
|
Operating cash flow before movements in working capital and provisions |
6,716 |
8,616 |
15,598 |
||||||
|
Decrease in trade and other receivables |
9,922 |
12,216 |
17,615 |
||||||
|
Decrease in trade and other payables |
(15,950) |
(17,911) |
(18,163) |
||||||
|
Net cash inflow from operating activities |
688 |
2,921 |
15,050 |
||||||
11. Cash consumed by acquisitions
|
Six months ended 30 June 2009 |
Six months ended 30 June 2008 |
Year ended 31 December 2008 |
|||||||
|
£000 |
£000 |
£000 |
|||||||
|
Initial cash consideration |
|||||||||
|
- Clear Ideas Ltd |
- |
(2,405) |
(2,405) |
||||||
|
- Walker Media Holdings Ltd |
- |
(9,258) |
(9,258) |
||||||
|
- Talk PR Ltd |
(58) |
- |
- |
||||||
|
- M&C Saatchi Berlin Gmbh |
(104) |
- |
- |
||||||
|
- Play London Ltd |
- |
(43) |
(43) |
||||||
|
- FCINQ SAS |
- |
- |
(71) |
||||||
|
- M&C Saatchi Immediate Sales Ltd |
- |
- |
(3) |
||||||
|
- M&C Saatchi Sport & Entertainment Ltd |
(171) |
- |
- |
||||||
|
(333) |
(11,706) |
(11,780) |
|||||||
|
Cash and cash equivalents acquired |
- |
- |
- |
||||||
|
(333) |
(11,706) |
(11,780) |
|||||||
|
Purchase of associate (Zapping, Spain) |
- |
(2,376) |
(2,376) |
||||||
|
Total payments made in the period relating to acquisitions |
(333) |
(14,082) |
(14,156) |
Related Shares:
M&C Saatchi