25th Sep 2007 07:02
M&C Saatchi PLC25 September 2007 M&C SAATCHI PLC INTERIM RESULTS SIX MONTHS TO 30 JUNE 2007 25 September 2007 M&C Saatchi plc, the international marketing communications group, todayannounces its results for the six months ended 30 June 2007. Headline financial results • Revenue (gross profit) up 8% to £37.3m (2006: £34.7m) • Operating profit up 61% to £2.8m (2006: £1.8m) • Profit before Tax up 59% to £3.9m (2006: £2.4m) • Profit after tax and minority interest up 122% to £1.9m (2006: £0.9m) • Earnings per share up 124% to 3.50p (2006: 1.56p) • Interim dividend increased by 13% to 0.87p. (2006: 0.77p) Reported results • Revenue (gross profit) up 8% to £37.3m (2006: £34.7m) • Operating profit up 61% to £2.8m (2006: £1.8m) • Profit before Tax up 64% to £3.3m (2006: £2.0m) • Profit after tax and minority interest up 194% to £1.4m (2006: £0.5m) • Earnings per share up 198% to 2.53p (2006: 0.85p) The headline results exclude the impact of the fair value adjustment to theminority shareholder put options liabilities of £0.5m (2006: £0.4m) and theamortisation of intangible assets of £17k (2006: £Nil). A further reconciliationis included in note 4 to the financial statements. Commenting on the results, David Kershaw the Chief Executive said: "The results for the period show significant progress for the Group. Trading hasbeen strong. The UK businesses continue to show good growth. The Asia andAustralia region had a tougher half but we are pleased that both the US andEuropean businesses are moving into profit. Strategically we have been activewith the acquisitions of Clear with offices in London, Amsterdam and New York,and Zapping in Madrid. We have increased our interest in Walker Media. Theseacquisitions have extended our international reach and moved us further intohigher margin disciplines. The outlook for the rest of the year remains in linewith expectations." For further information please call: M&C Saatchi plc 020 7543 4500David Kershaw, Chief Executive Tulchan Communications 020 7353 4200Celia Gordon Shute NUMIS 020 7260 1000Lee Aston Summary of results------------------ These results show a strong performance for the first six months with revenuegrowth of 7.7%, operating profit growth of 60.7% and headline earnings per sharegrowth of 124.4% (the headline earnings exclude the fair value adjustment tominority shareholder put options liabilities and the write off of intangibleassets). This encouraging year-on-year performance reflects the continued strength of ourUK business, the improvement in the results coming from the USA following itsreorganisation and the end of the investment phase in Europe. The Asia andAustralia region had a challenging first six months following account losses in2006. Key to the significant improvement in the headline earnings is the eliminationof the losses previously incurred in the USA and the end of the investment instart-up and development costs in Europe. The business in the USA has now been reorganised with our presence in New Yorkreduced to only that required to service key clients eliminating the significantlosses incurred in 2006. In the first six months of 2007 the USA contributed£0.06m to Group PBT (2006: £(0.24)m ). The last part of our planned expansion into continental Europe was completedwhen we acquired an initial 25% of Spanish Agency Zapping Publicidad (Zapping)in March (the results are included within the associate line). We now have apresence in Paris, Berlin and Madrid and all three are performing well. Financial review---------------- Revenue grew by 9.1% on a constant currency basis (reported 7.7%) with stronggrowth from the UK, America and Europe. Revenue from the Asia and Australiaregion declined by 5.8% (constant currencies). Operating profit increased by 60.7%. The significant increase is due to thecontinued growth in the UK but more importantly due to the reversal of losses inboth America and Europe, as they both exit investment phases. The cumulativeturnaround represents a contribution to Group operating profit of £1.3m. The operating margin increased to 7.6% (2006: 5.1%). The share of associates now includes the Group's share of results from PlayLondon Ltd in the UK and from March, Zapping in Spain. Net interest increased by 44.6% to £1.0m (2006: £0.7m). The Group headline tax rate improved to 31.7% (2006: 47.2%) due to theelimination of the significant non deductible losses incurred in 2006. The profit attributable to minorities increased by 75.8% to £0.8m (2006: £0.4m).This increase was mainly driven by the very strong performance of Walker Media.(On the 3rd July 2007 the Group acquired an additional significant proportion ofthe remaining minority (19.5% out of 25%). The headline profit after tax (attributable to equity holders) increased by121.8% and the headline EPS by 124.4% to 3.50p (2006: 1.56p). A reduction in theaverage number of shares in 2007 (due to a share buy back in October 2006) isthe reason for the EPS growth exceeding the headline PAT growth. The closing cash balance at the end of June was £25.8m a reduction of £5.5m overthe period from 31 December 2006. Cash inflow from normal activities was £1.7m.The significant cash outflows were dividend payments £2.5m, the investment inZapping £1.5m, and a reduction in the contribution from working capital of£3.2m. On the 3rd July 2007 we acquired an additional 19.5% of the share capital ofWalker Media for £8.8m in cash and 1.9m new shares. On the 5th July 2007 weacquired all the issued share capital in Clear Ideas Ltd (Clear) for an initialconsideration of £13.6m in cash and 3.4m new shares. These acquisitions havebeen funded in part from internal funds and from a £13m credit facility providedby RBS. Operating review---------------- Strategy At the time of the float in July 2004 we made clear our ambitions to grow M&CSaatchi into a global network. Subsequently we have declared our intention toextend into higher margin and higher growth disciplines. This year is animportant one in realising both these goals. We have a strong network of businesses across the world. This year, ourbusinesses in Continental Europe are forecast to exit the investment phase andwill make a profit contribution to the Group. Our business in the US hasstabilised with the focus of operations now based in LA. Trading in Asia andAustralia has been tougher, but will be a key management focus in the secondhalf. We now have a very compelling global client offering which is bolsteringour new business position. Our strategy to move the business into attractive growth markets and highermargin categories has progressed well in the first half. We have purchased anadditional 19.5% of Walker Media which takes our ownership to 94.5% and furtherstrengthens our position in this profitable marketplace. Additionally, weannounced the acquisition of Clear, which takes us into the attractive brandconsultancy market in the UK, US and Europe, an acquisition which will beearnings enhancing in the first year of ownership. UK Revenue in the UK grew by 8.6%, driven by an excellent performance from WalkerMedia and good new business wins elsewhere in the UK. Reported operating margins declined by 0.8pts to 14.0% (2006: 14.8%), as aresult of a reduction in the recharge of central costs to other parts of theGroup and an increase in the cost of the LTIP scheme. Key new accounts in UK advertising are Jamesons, which extends our relationshipwith Pernod Ricard, Porsche, Abercrombie & Kent, Vodafone, CRM and additionalassignments from Heinz. Walker Media continues to go from strength to strength under Phil Georgiadis'chairmanship winning new business from Ladbrokes and Eurostar-St Pancras.Additionally revenue growth has been driven by winning digital work from currentclients. Walker-i now accounts for 20% the Walker Media business. The integration of Clear, the brand consultancy business we acquired in July2007, is progressing very well. Clear is playing a crucial role in moving ourbusiness into attractive higher margin business streams. Europe The turnaround in the financial contribution from the European business issignificant. Revenue has increased to £2.1m (2006: £0.5m) and contribution tothe Group's PBT has increased by £1.1m to £0.1m (2006: £(1.0)m ). As reported, we acquired an initial 25% stake in Zapping (based in Madrid) inMarch. We will acquire a further 26% in 2008 and 25% in 2009. The acquisition ofZapping means that the Group now has a presence in the major markets inContinental Europe. Also at an end is the significant investment in start up anddevelopment costs incurred in 2005 and 2006. Our French office (M&C Saatchi GAD) continued its excellent progress with verysignificant new business wins from Pages Jaunes and Jamesons. They have alsoopened a corporate PR business (Me&US) with foundation clients Veolia, EADS,Ecole Polytechnique. In July 2006 we acquired the majority of a small German agency based in Berlin,therefore the 2007 interim results include a contribution for the first time.They have had a positive first six months with important wins from the GreenParty of Germany and Coca Cola. Asia and Australia The first six months of 2006 has been difficult principally as a result of theloss of IAG last year. Revenue declined by 5.8% using constant currencies (7.9% at reported rates). Theoperating loss increased to £(0.4)m (2006: £(0.1)m). We have started takingactions to refocus and reorganise the business, and early signs such as anaccount win from Abu Dhabi tourism and from Westfield, are encouraging. After encouraging starts both Singapore and Thailand encountered tough trading. Conversely Malaysia and New Zealand performed well in the first half, and theoutlook for these businesses is positive. America The reorganisation of the US operation is now complete, with the business runout of LA. We incurred reorganisation costs of £(0.3)m in the first quarter butthe business delivered a positive contribution to operating profit of £0.1m(2006: £(0.2)m ). Revenue increased by 35.6% using constant currencies (23.2% atreported rates). The office in LA continues to perform well with revenues up by 40% following agood new business performance in the second half of 2006. Further activity inNew York will be managed on a break even-basis. Outlook It is encouraging that both our European and North American businesses havemoved into profit in the first half of the year. Additionally, the prospects forour UK businesses are good, particularly in the higher margin businesses ofClear and Walker Media. Whilst Asia and Australia has had setbacks, we arecurrently undertaking an intensive review to re-energise the business. The outlook for the rest of the year remains in line with current expectationsand we are confident of further significant progress in 2008. This report comments on the unaudited consolidated income statement of M&CSaatchi plc (the "Group") for the six months to 30 June 2007 compared with therestated unaudited consolidated income statement for the same period in 2006.The report also comments on the numbers before the impact of fair valueadjustments to minority shareholder put option liabilities and amortisation ofintangible assets (headline numbers). The income statements for the six month period to 30 June 2006 and twelve monthsto 31 December 2006 are the restated results under IFRS. Explanations of thematerial restatements have been published prior to these results and can befound at www.mcsaatchiplc.com. M&C SAATCHI PLCUNAUDITED CONSOLIDATED INCOME STATEMENTAT 30 JUNE 2007 Six months Six months Year ended ended ended 31 December 30 June 2007 30 June 2006 2006 as restated as restated Note £'000 £'000 £'000 Turnover (billings) 4 182,791 150,256 369,490 -------- -------- --------Revenue 4 37,309 34,655 75,877 -------- -------- -------- Operating costs - ordinary (34,108) (32,711) (69,217) - share based payments (379) (188) (422) -------- -------- --------Total operating costs (34,487) (32,899) (69,639) -------- -------- -------- Operating profit 4 2,822 1,756 6,238 -------- -------- -------- Share of results of associates 5 54 2 5Finance income 964 676 1,540Finance costs 6 (508) (398) (9,003) -------- -------- --------Profit / (loss) before taxation 4 3,332 2,036 (1,220) -------- -------- -------- Taxation on profits 7 (1,215) (1,142) (2,852) -------- -------- --------Profit / (loss) for thefinancial period 2,117 894 (4,072) -------- -------- -------- Attributable to:Equity holders of the Group 12 1,356 461 (5,220)Minority interests 761 433 1,148 -------- -------- -------- 2,117 894 (4,072) -------- -------- -------- Earnings / (loss) per share 9Basic 2.53p 0.85p (9.73)pDiluted 2.50p 0.84p (9.73)p Headline resultsOperating profit 4 2,822 1,756 6,258Profit before tax 4 3,850 2,420 7,770 Headline earnings per share 9Basic 3.50p 1.56p 7.02pDiluted 3.45p 1.55p 6.93p M&C SAATCHI PLCUNAUDITED CONSOLIDATED BALANCE SHEETAT 30 JUNE 2007 Notes 30 June 2007 30 June 2006 31 December as restated 2006 as restated £'000 £'000 £'000Non current assetsIntangible assets 13 15,486 14,715 15,357Plant and equipment 3,541 3,275 3,531Investments in associates 1,646 - -Deferred tax assets 628 408 722Other non current assets 518 368 460 -------- -------- -------- 21,819 18,766 20,070 -------- -------- -------- Current assetsWork in progress 2,737 1,759 2,416Trade and otherreceivables 38,232 40,555 45,904Current tax assets 421 98 88Cash and cash equivalents 25,820 23,742 31,284 -------- -------- -------- 67,210 66,154 79,692 -------- -------- -------- Current liabilitiesTrade and other payables (52,577) (50,815) (63,430)Current tax liabilities (537) (815) (1,036)Provisions for put options (16,828) (6,821) (11,077) -------- -------- -------- (69,942) (58,451) (75,543) -------- -------- -------- Net current (liabilities)/ assets (2,732) 7,703 4,149 Total assets less currentliabilities 19,087 26,469 24,219 Non current liabilitiesOther non current liabilities (488) (587) (670)Deferred tax liabilities (150) (182) (141)Employment benefit provisions (506) (274) (221)Provisions for put options (8,196) (6,782) (11,211) -------- -------- -------- (9,340) (7,825) (12,243) -------- -------- --------Net assets 4 9,747 18,644 11,976 -------- -------- -------- Capital & reservesCapital 11 24,301 24,916 24,124Other reserves 11 (14,853) (12,765) (12,844)Retained (loss) / earnings 12 (410) 5,553 (466) -------- -------- --------Total shareholders' equity 9,038 17,704 10,814 -------- -------- -------- Minority interest in equity 709 940 1,162 -------- -------- --------Total equity 9,747 18,644 11,976 -------- -------- -------- M&C SAATCHI PLCUNAUDITED CONSOLIDATED CASH FLOW STATEMENTSIX MONTHS ENDED 30 JUNE 2007 Six months Six months Year ended ended ended 30 June 2007 30 June 2006 31 December as restated 2006 as restated Notes £'000 £'000 £'000 Cash generated from operations 15 589 6,220 18,716Tax paid (2,245) (1,123) (3,408) -------- -------- --------Net cash flow from operatingactivities (1,656) 5,097 15,308 -------- -------- -------- Interest earned from cash heldby trading entities 707 446 1,085Acquisitions and disposals 16 (1,542) - (635)Proceeds from sale of plant andequipment 20 - 16Purchase of plant and equipment (738) (771) (1,707)Purchase of capitalised software - (9) - -------- -------- --------Net cash from investing activities (1,553) (334) (1,241) -------- -------- -------- Dividends paid (1,300) (965) (1,377)Minority dividend paid (1,209) (468) (1,004)Purchase of own shares - - (792)Issue of own shares 3 - -Repayment of finance leases (22) (55) (108)Repayment of bank loans (6) - -Interest received on centrallyheld cash 257 230 455Interest paid (5) (9) (20)Interest on finance leases (3) (5) (13) -------- -------- --------Net cash from financing activities (2,285) (1,272) (2,859) -------- -------- -------- Net (decrease) / increase incash and cash equivalents (5,494) 3,491 11,208 Cash and cash equivalents atthe beginning of the period 31,284 20,457 20,457Effect of exchange rate changes 30 (206) (381) -------- -------- --------Cash and cash equivalents atthe end of the period 25,820 23,742 31,284 -------- -------- -------- M&C Saatchi plcNotes to the interim statements Six months ended 30 June 2007 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. This condensed consolidated half-yearly financial information was approved forissue on 24 September 2007. 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. 2. Basis of preparation This condensed consolidated half-yearly financial information for the half-yearended 30 June 2007 has been prepared in accordance with the AiM Rules forcompanies. The half-yearly condensed consolidated financial report should beread in conjunction with the annual financial statements for the year ended 31December 2006 and statement on the impact of IFRS on the financial statementsissued on 21 September 2007. The unaudited financial information presented in this document has been preparedon the basis of the expected accounting policies which the Group will complywith in the accounts to 31 December 2007 and on the basis of all InternationalFinancial Reporting Standards ('IFRS'), including International AccountingStandards ('IAS') and interpretations issued by the International AccountingStandards Board ('IASB') and its committees, as adopted by the EU. These aresubject to ongoing amendment by the IASB and subsequent endorsement by theEuropean Commission and are therefore subject to possible change. As a result,information contained within this release will require updating for anysubsequent amendment to IFRS required for first time adoption or those newstandards that the Group may elect to adopt early. 3. 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. 4. Segment information Segmental analysis is provided by reference to the geographical origin ofbusiness The directors believe that the underlying performance of the reportedgeographical segments is more clearly understood by reporting their performancebefore amortisation and put option charges. A reconciliation to IFRS GAAPreported operating profit and profit before tax is provided in each case. Six months Six months Year ended ended ended 30 June 2007 30 June 2006 31 December 2006 £'000 £'000 £'000Turnover (billings) UK 151,580 118,339 306,291Asia and Australia 21,929 27,202 51,995America 4,761 3,341 6,802Europe 4,521 1,374 4,402 -------- -------- -------- 182,791 150,256 369,490 -------- -------- -------- Revenue UK 22,014 20,279 44,336Asia and Australia 11,306 12,281 25,638America 1,917 1,555 3,632Europe 2,072 540 2,271 -------- -------- -------- 37,309 34,655 75,877 -------- -------- -------- Headline operating profit / (loss) UK 3,077 3,007 6,307Asia and Australia (360) (57) 1,496America 58 (239) (261)Europe 47 (955) (1,284) -------- -------- -------- 2,822 1,756 6,258 -------- -------- -------- Reconciliation to IFRS GAAP reported operating profit and loss Amortisation of intangibleassetsEurope - - (20) -------- -------- --------Reported operating profit 2,822 1,756 6,238 -------- -------- -------- 4. Segment information (continued) Six months Six months Year ended ended ended 30 June 2007 30 June 2006 31 December 2006 £'000 £'000 £'000 Headline profit / (loss) before tax UK 3,972 3,620 7,767Asia and Australia (348) (3) 1,558America 61 (235) (254)Europe 165 (962) (1,301) -------- -------- -------- 3,850 2,420 7,770 -------- -------- -------- Reconciliation to IFRS GAAP reported profit before tax Fair value adjustments tominority shareholder putoption liabilitiesUK (501) (384) (8,970)Amortisation of intangibleassetsEurope (17) - (20) -------- -------- --------Reported profitbefore tax 3,332 2,036 (1,220) -------- -------- -------- Net assets / (liabilities) UK 12,218 21,391 14,097Asia and Australia 2,698 2,616 3,095America (3,177) (3,377) (3,032)Europe (1,992) (1,986) (2,184) -------- -------- -------- 9,747 18,644 11,976 -------- -------- -------- 5. Share of results of associates Six months Six months Year ended ended ended 30 June 2007 30 June 2006 31 December 2006 £'000 £'000 £'000Share of result from associates Share of profit before taxation 132 2 7Amortisation recognised onacquisition of associate (17) - -Share of taxation (61) - (2) -------- -------- --------Total 54 2 5 -------- -------- -------- 6. Finance costs Six months Six months Year ended ended ended 30 June 2007 30 June 2006 31 December 2006 £'000 £'000 £'000Finance costs Bank interest chargeable (7) (14) (33)Fair value adjustments tominority shareholder putoption liabilities (501) (384) (8,970) -------- -------- --------Total (508) (398) (9,003) -------- -------- -------- 7. Taxation The effective annual tax rate for the period to 30 June 2007 is 36.5% (30 June2006 56.1%). The headline average annual tax rate used for the period to 30 June 2007 is31.7% (the estimated headline tax rate for the first-half to 30 June 2006 was47.2%). This decrease is mainly due to a reduction in entities reporting taxlosses with no associated tax credit. The difference between the headline and statutory tax rates is caused by adifference in the profit before tax as neither the impact of fair valueadjustments to minority shareholder put option liabilities or amortisation ofintangible assets has any effect on the tax charge. 8. Dividends A dividend of £1,300k was paid in June 2007. The dividend relates to the periodto 31 December 2006. In addition, the directors propose an interim dividend of 0.87 pence per share(2006: 0.77 pence per share) payable on 24 October 2007 to shareholders who areon the register at 5 October 2007. This interim dividend, amounting to £513k(2006: £412k) has not been recognised as a liability in this half-yearlyfinancial report. 9. Earnings per share Six months Six months Year ended ended ended 30 June 2007 30 June 2006 31 December 2006Reported earnings / (loss) per shareBasic 2.53p 0.85p (9.73)pDiluted 2.50p 0.84p (9.73)p DilutedProfit / (loss) for the period,attributable to equity shareholders 1,356 461 (5,220)Weighted average number of shares 54,244,749 54,644,954 54,347,216 --------- ---------- ---------Earnings / (loss) per share 2.50p 0.84p (9.73)p* --------- ---------- ---------BasicProfit / (loss) for the period,attributable to equity shareholders 1,356 461 (5,220)Weighted average number of shares 53,576,549 54,206,799 53,677,484 -------- --------- --------Earnings / (loss) per share 2.53p 0.85p (9.73)p -------- --------- -------- Headline earnings per shareBasic 3.50p 1.56p 7.02pDiluted 3.45p 1.55p 6.93p DilutedHeadline retained earnings 1,874 845 3,770 Weighted average number of shares 54,244,749 54,644,954 54,347,216 --------- ---------- ---------Earnings per share 3.45p 1.55p 6.93p --------- ---------- ---------BasicProfit / (loss) for the period,attributable to equity shareholders 1,356 461 (5,220)Fair value adjustments to minorityshareholder put option liabilities 501 384 8,970Amortisation of intangibles 17 - 20 --------- ---------- ---------Headline profit, for the periodattributable to equity shareholders 1,874 845 3,770 --------- ---------- --------- Weighted average number of shares 53,576,549 54,206,799 53,677,484 --------- ---------- ---------Earnings per share 3.50p 1.56p 7.02p --------- ---------- --------- * Diluted loss per share is reported equal to the basic loss per share. Dilutedloss per share is not reported as it is arithmetically greater than the basicloss per share figure. 10. Cash and cash equivalents Six months Six months Year ended ended ended 30 June 2007 30 June 2006 31 December 2006 £'000 £'000 £'000Cash and cash equivalentsCash held in hand and at bank 25,820 23,742 31,312Overdraft - - (28) --------- ---------- --------- 25,820 23,742 31,284 --------- ---------- --------- 11. Capital and other reserves Six months Six months Year ended ended ended 30 June 2007 30 June 2006 31 December 2006 £'000 £'000 £'000CapitalOrdinary share capital 543 542 542Share premium 9,794 9,618 9,618Merger reserve 14,756 14,756 14,756Treasury reserve (792) - (792) --------- ---------- ---------Total 24,301 24,916 24,124 --------- ---------- --------- Other reservesShare option reserve 1,002 718 845Put option reserve (15,595) (13,219) (13,318)Foreign exchange reserve (260) (264) (371) --------- ---------- ---------Total (14,853) (12,765) (12,844) --------- ---------- --------- 12. Consolidated statement of changes in equity Note Capital Other reserves Retained earnings Total £000s £000s £000s £000s --------- --------- ------- --------Balance at 31December 2006 24,124 (12,844) (466) 10,814 --------- --------- ------- -------- Currency translationdifferences - 111 - 111Profit for the period - - 1,356 1,356 --------- --------- ------- --------Total recognisedincome and expenses - 111 1,356 1,467 --------- --------- ------- -------- Issue of shares 177 - - 177Non cash sharebased incentive plans - 190 - 190New put optionsissued - (2,310) - (2,310)Dividends - - (1,300) (1,300) --------- --------- ------- --------Balance at 30June 2007 24,301 (14,853) (410) 9,038 --------- --------- ------- -------- 13. Intangibles Six months Six months Year ended ended ended 30 June 2007 30 June 2006 31 December 2006 £'000 £'000 £'000 Goodwill 15,394 14,627 15,270Other intangibles 92 88 87 -------- --------- --------Intanibles 15,486 14,715 15,357 -------- --------- -------- Other intangibles consist entirely of capitalised software costs. 14. Acquistion of associate On the 8 March 2007 the Group acquired 25% of Zapping Publicidad, S.A and itsgroup of companies, a Spanish marketing services group, with a commitment toacquire a further 50% over the next three years. Purchase consideration £000 Cash paid 1,349Direct costs relating to the acquisition 193 --------Total purchase consideration 1,542 --------Intangible assets acquired 88Net assets acquired 35 --------Goodwill 1,419 --------The goodwill is attributable to the company's award winning creative talent. 15. Cash generated from operations Six months Six months Year ended ended ended 30 June 2007 30 June 2006 31 December 2006 Notes £'000 £'000 £'000 Revenue 37,309 34,655 75,877Operating expenses (34,487) (32,899) (69,639) -------- -------- --------Operating Profit 2,822 1,756 6,238 Adjustments for:Depreciation of plant andequipment 759 578 1,212Losses on sale of plant andequipment 9 1 5Amortisation of intangibleassets - - 20Non-cash share based incentiveplans 190 119 213 -------- -------- --------Operating cash flow beforemovements in working capitaland provisions 3,780 2,454 7,688 -------- -------- --------(Increase)/decrease in work inprogress (309) 1,403 712Decrease in trade and otherreceivables 7,864 9,255 3,434(Decrease) / increase in tradeand other payables (10,850) (7,044) 6,416Increase in provisions 104 152 466 -------- -------- --------Net cash inflow from operatingactivities 589 6,220 18,716 -------- -------- -------- 16. Cash consumed by acquisitions Acquisitions £'000 £'000 £'000 Initial cash consideration - - (749)Cash and cash equivalents acquired - - 114 Purchase of associate (Zapping, Spain) (1,542) - - -------- -------- --------Total (1,542) - (635) -------- -------- -------- 17. Capital Commitments The only significant capital commitment is our agreement to acquire a further50% of Zapping Publicidad, S.A and its group over the next three years. 18. Events occurring post balance sheet date On the 3 July 2007 we acquired an additional 19.5% of the issued ordinary sharesof Walker Media Holdings Limited (Walker Media) for an initial consideration of£11.8 million. The consideration will be adjusted following the determination ofthe consolidated profit for Walker Media for the financial year ending 31December 2007. After the acquisition M&C Saatchi will hold 94.5% of the totalissued share capital of Walker Media. On the 5 July 2007 we acquired 100% of the total issued share capital of ClearIdeas Limited (Clear) for an initial consideration of £18.4 million. There is anearn out based on Clear's results to 31 March 2011. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
M&C Saatchi