REG-M&C Saatchi PLC Final Results

Released : 22/03/2007 07:01

                                                                                                                       .
RNS Number:4725T 
M&C Saatchi PLC 
22 March 2007 
 
 
 
 
                                                                   22 March 2007 
 
 
                                M&C Saatchi plc 
 
        Preliminary Results for the Twelve Months Ended 31 December 2006 
 
 
M&C Saatchi plc, today announces its preliminary results for the twelve months 
ended 31 December 2006. 
 
 
Group Highlights 
 
   - Revenues (gross profit) up 11.6% (12.5% at constant currency) to £75.9m 
    (2005: £68.0m) 
   - Strong new business wins across all regions 
   - Profit before tax (excluding amortisation) up 4.2% to £7.8m (2005: 
     £7.5m) 
   - Full year dividend up 25% at 3.2 pence 
   - Successful launch of second continental European office in Germany 
   - Agreement reached to open in Spain via partial acquisition 
 
 
 
Commenting on the results, David Kershaw, Chief Executive, said: "I am pleased 
to say that the Company had a good year. The business gained momentum throughout 
2006, and we grew our revenues and profits despite the departure of the BA 
account. In 2007 we expect to see our European business move into profit, with 
both Asia Pacific and America performing well. However the trading conditions in 
the UK remain challenging. Overall the outlook for 2007 remains in line with 
current expectations. " 
 
 
 
For further information please call: 
 
 
M&C Saatchi plc 020 7543 4500 
 
David Kershaw, Chief Executive 
 
 
Tulchan Communications 020 7353 4200 
 
Miranda Acland 
 
Celia Gordon Shute 
 
 
Definition 
 
To give a more meaningful commentary on the underlying performance of the 
business all references to profit, operating profit, profit before tax and 
profit for the financial year have been made before the amortisation of 
goodwill. The charge for the amortisation of goodwill is stated in the 
preliminary consolidated profit and loss account which follows this commentary. 
 
 
Overview 
-------- 
 
2006 has been a successful year for the Group, driven by a strong new business 
performance which gained momentum throughout the year. Reported revenues grew by 
11.6% (12.5% using constant currencies) to £75.9m (2005: £68.0m), the twelfth 
successive year of revenue growth. The performance has been the strongest in the 
UK across all the businesses but in particular Walker Media. In America the 
growth was driven by LA. Our offices in Australia and Malaysia also performed 
well. 
 
 
Group profits for 2006 increased by 4.2% to £7.8m (2005: £7.5m), with strong 
growth in the UK, Australia, LA and Malaysia. There were operating losses in New 
York, Asia (excluding Malaysia) and New Zealand. Group margin reduced to 10.2% 
(2005: 11.0%). 
 
 
Our expansion into Europe remains on track. In July 2006 we acquired Berlin 
agency International Projects, now re-branded M&C Saatchi to add to our Paris 
office which opened in September 2005. The Paris office had an excellent first 
full year. We are delighted to be able to announce that we have acquired 25% of 
a Spanish marketing services group, with a commitment to acquire a further 50% 
over the next two years. We will make a further announcement once all the 
formalities have been completed. 
 
 
 
Financial Review 
 
 
Revenue 
 
 
 
                    2006          2006              Inc/Dec 
                   £000's     Contribution   Reported     Constant 
                                              rates        rates 
                 ---------    ------------    -------     --------  
UK               44,336           58%           12.3%        12.3% 
Asia & Australia 25,638           34%            2.2%         4.4% 
America          3,632             5%           13.1%        14.6% 
Europe           2,271             3%          ****         **** 
                 ---------    ------------    -------     -------- 
Group Total      75,877           100%          11.6%        12.5% 
                 ---------    ------------    -------     -------- 
 
 
2006 was our strongest year of revenue growth since 2000. Organic growth is 
still the main driver of the group's success accounting for 11.8% of the 
underlying growth of 12.5% (using constant exchange rates). 
 
 
There were good revenue performances from companies across the group, the 
outstanding performances coming from Walker Media, in the UK, and from Malaysia 
and LA. 
 
 
We are now starting to see an important contribution from our European expansion 
with first full year revenues from our office in Paris and second half 
contribution from our Berlin office. 
 
 
 
 
 
Operating Performance 
 
 
 
                            Operating Profit              Operating Margin 
                                                             (Operating 
                                                          profit : revenue) 
                      --------  ---------------        ---------------------              
                      £'000s         06 V's 05            V's 05     2006 
                                  £000's      %              %        % 
 
UK                    6,307      496      9%             -0.5pts   14.2% 
Asia & Australia      1,496      (621)    -29%           -2.6pts   5.8% 
America               (261)      61       23%            2.8pts    -7.2% 
Europe                (1,284)    145      10%            ***       *** 
                      --------  ---------------        ---------------------              
Group Total           6,258      81       1%             -0.8pts   8.2% 
                      --------  ---------------        ---------------------              
 
 
The headline operating profit increased by 1.3% to £6.3m (2005: £6.2m). The 
operating margin declined by 0.8pts to 8.2%. 
 
 
The operating performance was held back by the final year of investment into 
Europe (£1.3m) and the continued support of the New York office which resulted 
in the net operating loss of £261k across the two offices in America. The 
reduction in the Group's operating margin is largely due to the decline in 
profit in Asia and Australia down 29% or £621k to £1.5m (2005: £2.1m). 
 
 
The contribution from net interest grew by 10.6% to £1.5m (2005: £1.4m). 
 
 
Profit before tax increased by 4.2% to £7.8m (2005: £7.5m). 
 
 
The effective tax rate for the Group increased marginally to 37.1% (2005: 
36.1%). The rate remains high due to the Group not being able to utilise trading 
losses where incurred, against current profits. 
 
 
The profit for the financial year (after tax and minority interest) declined by 
8.9% to £3.7m (2005: 4.1m). This was due to the significant increase in earnings 
attributable to minorities up 73% to £1.1m (2005: £663k), the principal reason 
was the increase in profits from Walker Media where there is a 25% minority held 
by the management. 
 
 
The Board has recommended a final dividend of 2.43 pence per share (2005: 1.78 
pence), which together with the interim dividend of 0.77 pence per share gives a 
full year dividend of 3.2 pence (2005: 2.55 pence), an increase of 25%. The 
dividend will be paid on the 11th June 2007 to shareholders on the register as 
at 11th May 2007. 
 
 
 
 
 
 
Review of Operations 
-------------------- 
 
UK 
 
 
The UK had an excellent year with revenues up by 12.3% to £44.3m (2005: £39.5m). 
There were strong performances from Walker Media (media planning and buying), 
LIDA (direct & digital marketing), Talk PR and from M&C Saatchi Sports and 
Entertainment. Around 53% (2005: 45%) of revenues in the UK are now derived from 
services provided outside the creation of advertising. Account wins across the 
UK business during 2006 included Kingsmill (Allied Bakeries), Lucozade Energy 
(GSK), CB Richard Ellis, and Swiss One. Digital and on-line activities are 
becoming increasingly important and have continued to drive growth in all parts 
of the Group but specifically in LIDA and Walker-i. 
 
 
Competitive pressures in the Advertising industry remain strong. Clients 
continue to seek increased service levels at lower fees and a re-pitch is 
becoming an opportunity to seek fresh ideas and lower fees. This is having its 
inevitable effect on the operating margin which has declined by 0.5pts to 14.2%. 
 
 
Asia and Australia 
 
 
The performance across the region was mixed. Revenues were up by 2.2% (4.4 % at 
constant currencies) but profit declined by 29% to £1.5m (2005: £2.1m). The 
operating margin declined by 2.6pts to 5.8%. As already highlighted the offices 
in Malaysia and Australia both had strong years with the combined profits 
increasing by £449k or 26% to £2.1m. The picture was less good elsewhere. The 
start up offices in India and Thailand contributed to the revenue growth but 
incurred combined first full year losses of £354k, however 2007 has started well 
with India winning the Jet Airways account. 
 
 
The rest of the region (Greater China, Singapore and New Zealand) reported a net 
loss of £299k. The operating performance of these offices improved significantly 
in the second half and they are in better shape in 2007. 
 
 
America 
 
The US business has seen good growth with revenues up 13.1% (14.6% at constant 
currency) to £3.6m (2005: £3.2m). Our highly successful office in Los Angeles is 
becoming the focus of our US business with revenues up 47% more than 
compensating for the decline in New York. The most significant new business win 
in the US was Petco in LA. Other important wins included City National Bank, 
Network Omni and the Getty museum. 
 
 
We have recently scaled back our New York overhead by consolidating the US 
Management into LA in order to restore the region to profit. 
 
 
Europe 
 
After a good start last autumn, our Paris office has continued its successful 
progress with first full year revenues on budget. New account wins have included 
further brands from Pernod Ricard, which is developing into a strong 
pan-European account run from France, S'Miles, Branly Museum, Bordeaux Wines, 
and Yves Rocher. The year ended on a high following the win of La Banque 
Postale. Together with the contribution from our Berlin business which has 
already built up an impressive array of clients including Ferrero and Coca Cola, 
the region generated revenues of £2.3m for the year and is expected to move into 
profit in 2007. 
 
 
As announced above we have made an initial acquisition of 25% of a Spanish 
Marketing Services group with a commitment to acquire a further 50% over the 
next two years. The Spanish group made a PBT of £0.9m in 2006. 
 
 
 
 
 
Outlook 
-------- 
The investment phase of our European expansion (£1.3m in 2006) is now complete 
and we expect that the region will move into profit in 2007. 
 
Conditions are fairly tough in the UK and Australia. However, there is 
significant room for improvement from the offices in Asia Pacific and New York. 
There remains broader opportunities for new business development and earnings 
growth around the world. 
 
Taking all of this into account, the outlook for 2007 remains in line with 
current expectations. 
 
 
 
 
 
M&C SAATCHI PLC 
 
PRELIMINARY CONSOLIDATED PROFIT AND LOSS ACCOUNT 
 
                                  Note Unaudited         Audited 
                                            year            year 
                                           ended           ended 
                                          31-Dec          31-Dec 
                                            2006            2005 
                                            £000            £000 
Turnover 
- Continuing operations                  368,918         298,284 
- Acquisitions                               572               - 
________________________________________________________________ 
Turnover                           2     369,490         298,284 
Cost of sales                      3   (293,613)       (230,283) 
________________________________________________________________ 
Gross profit                              75,877          68,001 
________________________________________________________________ 
Administrative expenses 
- Ordinary                              (69,197)        (61,639) 
- Share based payment                      (422)           (185) 
- Amortisation of goodwill               (1,735)         (1,688) 
________________________________________________________________ 
Administrative expenses            3    (71,354)        (63,512) 
 
Operating profit 
- Continuing operations                    4,455           4,480 
- Acquisitions                                68               9 
________________________________________________________________ 
Operating profit                           4,523           4,489 
 
Share of operating profit /(loss)             15            (75) 
of associates 
Interest receivable                        1,540           1,384 
Interest payable                            (41)            (29) 
________________________________________________________________ 
Profit on ordinary activities              6,037           5,769 
before taxation 
________________________________________________________________ 
Taxation on profit on ordinary     4     (2,886)         (2,690) 
activities 
________________________________________________________________ 
Profit on ordinary activities              3,151           3,079 
after taxation 
________________________________________________________________ 
Minority interests                       (1,148)           (663) 
________________________________________________________________ 
Profit for the financial year              2,003           2,416 
________________________________________________________________ 
Earnings per share 
- Basic                            6       3.73p           4.46p 
- Diluted                          6       3.69p           4.41p 
 
 
All amounts relate to continuing activities. 
The reconciliation of movements in shareholders' funds is shown in note 8. 
 
 
 
 
 
M&C SAATCHI PLC 
 
PRELIMINARY CONSOLIDATED STATEMENT OF 
TOTAL RECOGNISED GAINS AND LOSSES 
 
                                        Unaudited    Audited 
                                             Year       Year 
                                            ended      ended 
                                           31-Dec     31-Dec 
                                             2006       2005 
                                             £000       £000 
Profit for the financial year 
- Group                                     1,998      2,497 
- Associates                                    5       (81) 
____________________________________________________________ 
                                            2,003      2,416 
 
Exchange differences on                     (305)       (50) 
retranslation of opening reserves 
____________________________________________________________ 
Total recognised gains and losses           1,698      2,366 
for the financial year 
____________________________________________________________ 
 
 
M&C SAATCHI PLC 
 
PRELIMINARY CONSOLIDATED BALANCE SHEET 
 
                                  Note  Unaudited Unaudited     Audited  Audited 
                                               At        At          At       At 
                                           31-Dec    31-Dec      31-Dec   31-Dec 
                                             2006      2006        2005     2005 
                                             £000      £000        £000     £000 
Fixed assets 
Intangible assets                                    13,555               14,592 
Tangible assets                                       3,618                3,194 
Investments                                              93                  100 
________________________________________________________________________________ 
                                                     17,266               17,886 
Current assets 
Work in progress                            2,416                 3,277 
Debtors 
- Due within one year                      45,988                50,552 
- Due after more than one year              1,141                   578 
________________________________________________________________________________ 
Total debtors                              47,129                51,130 
Cash at bank and in hand                   31,312                20,486 
________________________________________________________________________________ 
                                           80,857                74,893 
Creditors 
- Amounts falling due within one year      64,494                58,969 
________________________________________________________________________________ 
Net current assets                                   16,363               15,924 
________________________________________________________________________________ 
Total assets less current                            33,629               33,810 
liabilities 
 
Creditors 
- Amounts falling due after more                        759                  868 
than one year 
Provisions for liabilities and                          350                  404 
charges 
________________________________________________________________________________ 
                                                     32,520               32,538 
________________________________________________________________________________ 
 
Capital and reserves 
Share capital                        7                  542                  542 
Share premium account                7                9,618                9,618 
Merger reserve                       7               13,553               14,756 
Treasury shares                      7                (792)                    - 
Share option reserve                 7                  812                  599 
Profit and loss account              7                7,625                6,101 
________________________________________________________________________________ 
Shareholders' funds - equity         7               31,358               31,616 
Minority interests - equity                           1,162                  922 
________________________________________________________________________________ 
                                                     32,520               32,538 
________________________________________________________________________________ 
 
 
M&C SAATCHI PLC 
 
PRELIMINARY Consolidated Cash Flow Statement 
 
                                    Note   Unaudited         Audited 
                                                Year            Year 
                                               ended           ended 
                                              31-Dec          31-Dec 
                                                2006            2005 
                                                £000            £000 
Cash inflow from operating                    18,506           7,046 
activities 
 
Returns on investments and            9          543             933 
servicing of finance 
                                      9      (3,275)         (2,544) 
 
Taxation 
                                      9      (1,670)         (1,252) 
 
Capital expenditure and financial 
investment 
                                      9        (628)           (182) 
 
Acquisitions and disposals 
Equity dividends paid                 5      (1,377)         (1,045) 
____________________________________________________________________ 
Net cash inflow before financing              12,099           2,956 
 
Financing                             9        (866)            (18) 
____________________________________________________________________ 
Increase in cash in the year         11       11,233           2,938 
____________________________________________________________________ 
 
 
 
 
NET CASH INFLOW FROM OPERATING ACTIVITIES 
 
                                        Unaudited            Audited 
                                             Year               Year 
                                            ended              ended 
                                           31-Dec             31-Dec 
                                             2006               2005 
                                             £000               £000 
Operating profit                            4,523              4,489 
Amortisation of intangible fixed            1,735              1,688 
assets 
Depreciation                                1,212              1,183 
Loss on sale of tangible fixed                  4                 59 
assets 
Decrease in work in progress                  747                224 
Decrease / (Increase) in debtors            3,036            (3,003) 
Increase in creditors                       6,775              2,213 
Increase in provision                         189                186 
Option charge                                 213                 85 
Exchange differences                           72               (78) 
____________________________________________________________________ 
                                           18,506              7,046 
____________________________________________________________________ 
 
 
M&C SAATCHI PLC 
 
NOTES TO THE PRELIMINARY STATEMENT 
 
1. Statutory information 
 
The financial information contained in this announcement, for the years ended 
31st December 2006 or 2005, does not constitute statutory financial statements 
within the meaning of section 240 of the Companies Act 1985. The financial 
information for the year ended 31st December 2005 is derived from the statutory 
accounts for that year which have been delivered to the Registrar of Companies. 
The auditors report on those accounts was unqualified. The statutory accounts 
for the year ended 31st December 2006 will be finalised on the basis of the 
financial information presented by the directors in this unaudited preliminary 
announcement and will be delivered to the Registrar of Companies following the 
company's annual general meeting. The audit report for the year ended 31st 
December 2006 has yet to be signed. 
 
 
The preliminary announcement was approved by the board of directors on 21st 
March 2007. 
 
 
 
 
M&C SAATCHI PLC 
 
NOTES TO THE PRELIMINARY STATEMENT (Continued) 
 
 
2. Turnover, profit and net assets 
 
Turnover and profit before taxation are attributable to the provision of 
advertising and marketing services. 
 
                                   Unaudited         Audited 
                                        2006            2005 
                                        £000            £000 
 
Turnover 
Analysis by geographical market: 
 
By origin and destination 
UK                                   306,291         245,926 
Asia and Australia                    51,995          45,636 
America                                6,802           6,417 
Europe                                 4,402             305 
____________________________________________________________ 
                                     369,490         298,284 
____________________________________________________________ 
 
Gross profit 
Analysis by geographical market: 
 
By origin 
UK                                    44,336          39,470 
Asia and Australia                    25,638          25,084 
America                                3,632           3,211 
Europe                                 2,271             236 
____________________________________________________________ 
                                      75,877          68,001 
____________________________________________________________ 
 
Operating profit / (loss) - excluding amortisation of 
goodwill 
Analysis by geographical market: 
 
By origin 
UK                                     6,307           5,811 
Asia and Australia                     1,496           2,117 
America                                (261)           (322) 
Europe                               (1,284)         (1,429) 
____________________________________________________________ 
                                       6,258           6,177 
____________________________________________________________ 
 
 
M&C SAATCHI PLC 
 
NOTES TO THE PRELIMINARY STATEMENT (Continued) 
 
2. Turnover, profit and net assets CONTINUED 
                                 Unaudited         Audited 
                                      2006            2005 
                                      £000            £000 
Operating profit/(loss) 
Analysis by geographical market: 
 
By origin 
UK                                   4,572           4,123 
Asia and Australia                   1,496           2,117 
America                              (261)           (322) 
Europe                             (1,284)         (1,429) 
____________________________________________________________ 
                                     4,523           4,489 
____________________________________________________________ 
 
Profit/(loss) before taxation 
Analysis by geographical market: 
 
By origin 
UK                                   6,034           5,318 
Asia and Australia                   1,558           2,202 
America                              (254)           (319) 
Europe                             (1,301)         (1,432) 
____________________________________________________________ 
                                     6,037           5,769 
____________________________________________________________ 
 
Net assets/(liabilities) 
Analysis by geographical market: 
 
By origin 
UK                                  34,621          32,008 
Asia and Australia                   3,095           3,646 
America                            (3,032)         (1,950) 
Europe                             (2,164)         (1,166) 
____________________________________________________________ 
                                    32,520          32,538 
____________________________________________________________ 
 
 
M&C SAATCHI PLC 
 
NOTES TO THE PRELIMINARY STATEMENT (Continued) 
 
3. Cost of sales and administrative expenses 
                                   Unaudited         Audited 
                                        2006            2005 
                                        £000            £000 
Cost of sales 
Continuing operations                293,512         230,283 
Acquisitions                             101               - 
____________________________________________________________ 
                                     293,613         230,283 
____________________________________________________________ 
 
 
Administrative expenses 
Continuing operations                 70,951          63,512 
Acquisitions                             403               - 
____________________________________________________________ 
                                      71,354          63,512 
____________________________________________________________ 
 
The acquisition in the year relates to 03 International Projects GmbH which was 
acquired and rebranded as M&C Saatchi Berlin GmBH on 24th July 2007. 
 
M&C SAATCHI PLC 
 
NOTES TO THE PRELIMINARY STATEMENT (Continued) 
 
 
4. TAXATION ON PROFIT FROM ORDINARY ACTIVITIES 
 
                                        Unaudited Unaudited    Audited  Audited 
                                       Year ended      Year Year ended     Year 
                                                      ended               ended 
                                             2006      2006       2005     2005 
                                             £000      £000       £000     £000 
Current tax 
 
UK corporation tax on profit for            2,275                1,991 
the year 
Overseas tax payable                          916                  605 
Adjustment in respect of previous            (68)                   53 
years 
Associates                                      2                    - 
________________________________________________________________________________ 
Total current tax                                     3,125               2,649 
Deferred tax 
Origination and reversal of                           (239)                  41 
timing differences 
________________________________________________________________________________ 
Taxation on profit on ordinary                        2,886               2,690 
activities 
________________________________________________________________________________ 
 
The tax assessed for the year differs from that obtained by using the standard 
rate of corporation tax in the UK. The differences are explained below: 
 
                                                           Unaudited    Audited 
                                                                Year Year ended 
                                                               ended 
                                                                2006       2005 
                                                                £000       £000 
________________________________________________________________________________ 
Profit on ordinary activities                                  6,037      5,769 
before tax 
________________________________________________________________________________ 
 
Profit on ordinary activities at the standard 
rate of corporation 
tax in the UK of 30% (2005: 30%)                               1,811      1,731 
 
Effects of: 
Expenses not deductible for tax                                  238        215 
Goodwill amortisation                                            520        506 
Unrelieved losses carried forward                                292        204 
Differences between capital allowances and                      (23)         23 
depreciation 
Short term timing differences                                    188      (113) 
Short term timing differences due to provision 
on options 
and phantom bonus accruals                                       112         49 
Adjustment to tax charge in respect of previous                 (68)         53 
years 
Tax rate differences                                              55       (19) 
________________________________________________________________________________ 
Current tax charge for year                                    3,125      2,649 
________________________________________________________________________________ 
                                                                
 
 
 
M&C SAATCHI PLC 
 
NOTES TO THE PRELIMINARY STATEMENT (Continued) 
 
 
5. Dividends 
                                           Unaudited      Audited 
                                                Year         Year 
                                               ended        ended 
                                                2006         2005 
                                                £000         £000 
 
2005 Final dividend 1.78p (2004:                 965          629 
1.16p) 
 
2006 Interim dividend of 0.77p                   412          416 
per share (2005: 0.77p) 
_________________________________________________________________ 
                                               1,377        1,045 
_________________________________________________________________ 
2006 Final dividend 2.43p (£1,300,000) 
 
 
 
 
M&C SAATCHI PLC 
 
NOTES TO THE PRELIMINARY STATEMENT (Continued) 
 
 
6. Earnings per share 
 
Basic and diluted earnings per share are calculated by dividing profit after tax 
and minority interest by the number of shares in issue during the year. 
 
Earnings per share are calculated as follows: 
                                            Unaudited      Audited 
                                           Year ended   Year ended 
                                                 2006         2005 
                                                 £000         £000 
Numerator for calculation of                    2,003        2,416 
basic and diluted EPS 
__________________________________________________________________ 
 
Denominator 
Weighted average number of                 53,677,484   54,206,799 
ordinary shares used in basic EPS 
Sharesave options                             258,682      130,138 
Options                                       411,050      411,050 
__________________________________________________________________ 
Weighted average number of                 54,347,216   54,747,987 
ordinary shares used in diluted EPS 
__________________________________________________________________ 
 
Earnings per share 
Basic                                           3.73p        4.46p 
Diluted                                         3.69p        4.41p 
 
 
On 31st December 2006 there were 669,732 (2005: 670,634) outstanding options. 
 
 
Headline earnings per share 
 
The headline (IIMR) earnings per share is based on headline earnings as 
recommended by Statement of Investment Practice No.1. This is earnings 
excluding: 
- amortisation of goodwill 
- profit or loss on disposal of fixed assets; and 
- profit or losses on the disposal of discontinued operations (which we have 
none) 
 
 
The directors believe that this gives a better view of ongoing maintainable 
earnings. 
Headline Earnings per share 
Basic                                           6.97p        7.68p 
Diluted                                         6.89p        7.61p 
 
Numerator for calculation of basic               2006         2005 
and diluted headline EPS 
Profit for financial year                       2,003        2,416 
Goodwill amortisation                           1,735        1,688 
Loss on disposal of fixed assets                    4           59 
__________________________________________________________________ 
Earnings used for calculation of                3,742        4,163 
headline basic and diluted EPS 
__________________________________________________________________ 
 
Denominator - The number of shares is the same as calculated for statutory EPS 
 
 
 
M&C SAATCHI PLC 
 
NOTES TO THE PRELIMINARY STATEMENT (Continued) 
 
 
7. Reserves 
 
                       Ordinary   Share                    Share  Profit 
                          share premium  Merger Treasury  option     and 
                                                                    loss 
                        capital account reserve  reserve reserve account   Total 
                           £000    £000    £000     £000    £000    £000    £000 
At 1 January 2005           542   9,618  14,756        -     599   6,101  31,616 
(audited) 
Exchange differences          -       -       -        -       -   (305)   (305) 
Non cash share based          -       -       -              213       -     213 
incentive plans 
Merger reserve release on     -       - (1,203)        -       -   1,203      - 
goodwill amortisation 
Dividends                     -       -       -        -       - (1,377) (1,377) 
Purchase of own shares        -       -       -    (792)       -       -   (792) 
Retained profit for the       -       -       -        -       -  2,003    2,003 
year 
________________________________________________________________________________ 
At 31 December 2006         542   9,618  13,553    (792)     812   7,625  31,358 
(unaudited) 
________________________________________________________________________________ 
                                                       
 
 
 
8. Reconciliation of movement in shareholders' funds 
 
                                     Unaudited      Audited 
                                          Year         Year 
                                         ended        ended 
                                          2006         2005 
                                          £000         £000 
Profit for the financial year 
- Group                                  1,998        2,497 
- Associates                                 5         (81) 
Dividend                               (1,377)      (1,045) 
___________________________________________________________ 
                                           626        1,371 
 
Exchange differences                     (305)         (50) 
Non cash share based incentive             213           85 
plans 
Purchase of own shares                   (792)            - 
___________________________________________________________ 
 
Net (reduction) / addition to 
shareholders' funds                      (258)        1,406 
Opening shareholders' funds             31,616       30,210 
___________________________________________________________ 
Closing shareholders' funds             31,358       31,616 
___________________________________________________________ 
 
 
 
 
M&C SAATCHI PLC 
 
NOTES TO THE PRELIMINARY STATEMENT (Continued) 
 
 
9. ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT 
                                         Unaudited          Audited 
                                              Year             Year 
                                             ended            ended 
                                            31-Dec           31-Dec 
                                              2006             2005 
                                              £000             £000 
 
Returns on investments and 
servicing of finance 
Interest received                            1,540            1,384 
Interest paid                                 (20)              (8) 
Interest element of finance lease 
rental payments                               (13)             (15) 
Minority interest dividend paid              (964)            (428) 
___________________________________________________________________ 
                                               543              933 
___________________________________________________________________ 
 
Taxation 
UK taxation paid                           (2,215)          (1,851) 
Overseas taxation paid                     (1,060)            (693) 
___________________________________________________________________ 
                                           (3,275)          (2,544) 
___________________________________________________________________ 
 
Capital expenditure and financial 
investment 
Purchase of tangible fixed assets          (1,686)          (1,289) 
Sale of tangible fixed assets                   16               37 
___________________________________________________________________ 
                                           (1,670)          (1,252) 
___________________________________________________________________ 
 
Acquisitions and disposals 
Investment in subsidiary                     (741)            (369) 
Cash acquired with subsidiary                  113              187 
undertakings 
___________________________________________________________________ 
                                             (628)            (182) 
___________________________________________________________________ 
 
Financing 
Purchase of own shares                       (792)                - 
Shares issued to minorities in                   -              124 
subsidiaries 
Inception of bank loans                         34                - 
Repayment of bank loans                        (2)                - 
Capital element of finance lease             (106)             (142) 
rental payments 
___________________________________________________________________ 
                                             (866)             (18) 
___________________________________________________________________ 
 
 
M&C SAATCHI PLC 
 
NOTES TO THE PRELIMINARY STATEMENT (Continued) 
 
 
10. ANALYSIS OF CHANGES IN NET FUNDS 
 
                          Balance                              Balance at 
                               at 
                           01-Jan Cash     Finance  Exchange       31-Dec 
                             2006 inflow   leases   movements        2006 
                        (Audited)                             (Unaudited) 
                             £000     £000     £000      £000        £000 
Cash at bank and in        20,486   11,233       -      (407)      31,312 
hand 
Overdrafts                   (29)        -       -         1         (28) 
Bank loan                       -     (32)        -         -        (32) 
Finance leases              (128)      106      (6)       (3)        (31) 
_________________________________________________________________________ 
Total                      20,329   11,307      (6)     (409)      31,221 
_________________________________________________________________________ 
 
 
 
 
11. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 
 
                                     Unaudited Unaudited  Audited  Audited 
                                          Year      Year     Year     Year 
                                         ended     ended    ended    ended 
                                          2006      2006     2005     2005 
                                          £000      £000     £000     £000 
Increase in cash in the year            11,233              2,938 
Cash outflow from decrease 
in lease financing                         106                142 
Inception of finance leases                (6)               (14) 
Exchange differences                     (409)                184 
Cash outflow from repayment of               2                  - 
bank loan 
Inception of bank loan                    (34)                  - 
Movement in net funds in the year                 10,892             3,250 
Net funds at start of year                        20,329            17,079 
___________________________________________________________________________ 
Net funds at end of year                          31,221            20,329 
___________________________________________________________________________ 
 
 
 
 
 
 
                      This information is provided by RNS 
            The company news service from the London Stock Exchange 
 
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