REG-M&C Saatchi PLC Final Results - 2007 Prelims - Part 2
Released : 27/03/2008 07:04
.
RNS Number:8698Q
MC Saatchi PLC
Part 2 : For preceding part double-click [nRNSa8698Q]
UNAUDITED CONSOLIDATED CASH FLOW
Year ended 31 December Notes 2007 2006
£000 £000
Cash generated from operations 13 8,991 18,716
Tax paid (4,092) (3,408)
---------------------------------- ----- -------- --------
Net cash flow from operating activities 4,899 15,308
---------------------------------- ----- -------- --------
Cash generated from investing activities
Acquisitions 14 (24,602) (635)
Proceeds from sale of plant and equipment 23 16
Purchase of plant and equipment (1,401) (1,707)
Purchase of capitalised software (107) -
---------------------------------- ----- -------- --------
Net cash from investing activities (26,087) (2,326)
---------------------------------- ----- -------- --------
Cash generated from financing activities
Dividends paid to equity holders of the company (1,813) (1,377)
Minority dividend paid (1,404) (1,004)
Purchase of own shares - (792)
Repayment of finance leases (39) (108)
Inception of bank loans 13,000 -
Repayment of bank loans (4,514) -
Interest paid (437) (20)
Interest earned from trading entities 1,553 1,085
Interest received on centrally held cash 256 455
Interest on finance leases (2) (13)
---------------------------------- ----- -------- --------
Net cash from financing activities 6,600 (1,774)
---------------------------------- ----- -------- --------
Net (decrease) / increase in cash and cash (14,588) 11,208
equivalents
---------------------------------- ----- -------- --------
Cash and cash equivalents at the beginning of the 31,284 20,457
period
Effect of exchange rate changes 199 (381)
---------------------------------- ----- -------- --------
Cash and cash equivalents at the end of the period 16,895 31,284
---------------------------------- ----- -------- --------
M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENT
Notes
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 Stock
Exchange.
The 2007 preliminary financial statements were approved for issue on 26 March
2008.
The financial information included in this report does not constitute statutory
accounts 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 constitute
the Group's statutory accounts for that financial year. Those accounts, which
were prepared under UK GAAP, have been reported on by the Company's auditors and
delivered to the Registrar of Companies. The auditor's report on those statutory
accounts was unqualified, did not include references to any matters to which the
auditors drew attention by way of emphasis without qualifying their report, and
did not contain a statement under section 237(2) or (3) of the Companies Act
1985.
The unaudited financial information presented in this document has been prepared
in accordance with International Financial Reporting Standards (IFRS) adopted by
the European Union and therefore the Group financial statements comply with
Article 4 of the EU IAS Regulation.
As this report is the Group's first IFRS report IFRS 1, First-time Adoption of
International Financial Reporting Standards, has been applied. The financial
statements should be read in conjunction with the Group's statement on the
impact of IFRS on financial statements, which was published on 21 September
2007, along with note 16 which shows an explanation of how the transition to
IFRS has affected the reported financial position, financial performance and
cash flows of the Group. This Statement includes reconciliations of equity and
profit or loss for comparative periods reported under UK GAAP to those reported
for those periods under IFRS.
The Group has adopted all of the standards and interpretations that were
mandatory for accounting periods beginning on or after 1 January 2007 that are
relevant to the operations of the Group.
Headline results
The directors believe that the headline results and headline earnings per share
provide additional useful information on the underlying performance trends of
business to shareholders. In addition the headline result is used for internal
performance management and the calculation of rewards in the Group's Long Term
Incentive Plan (LTIP) scheme. The term headline is not a defined term in IFRS.
The items that are excluded from headline results are the fair value gains and
losses on liabilities caused by our put option agreements, amortisation of
intangible assets created in business combinations and charges as a result of
goodwill impairment.
Accounting Policies
The accounting policies adopted are consistent with those set out in the
statement on the impact of IFRS on financial statements issued on 21 September
2007.
M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENT
Notes - Continued
2. HEADLINE RESULTS AND EARNINGS PER SHARE
The analysis below provides a reconciliation between the Group's statutory
results and the headline results with the associated earnings per share
calculations.
Basic and diluted earnings per share is calculated by dividing profit
attributable to equity holders of the Group by the average number of shares in
issue during the year.
Year ended 31 December 2007 Reported Amortisation of Fair value Notional Headline
results acquired adjustments to interest on results
intangibles minority put deferred
option consideration
liabilities
£000 £000 £000 £000 £000
---------------- -------- --------- -------- --------- ----------
Revenue 87,620 - - - 87,620
---------------- -------- --------- -------- --------- ----------
Operating
profit 9,614 608 - - 10,222
---------------- -------- --------- -------- --------- ----------
Share of results of
associates 281 53 - - 334
Net interest (1,939) - 3,052 257 1,370
---------------- -------- --------- -------- --------- ----------
Profit before
taxation 7,956 661 3,052 257 11,926
---------------- -------- --------- -------- --------- ----------
Taxation (3,530) (182) - - (3,712)
---------------- -------- --------- -------- --------- ----------
Profit after
taxation 4,426 479 3,052 257 8,214
---------------- -------- --------- -------- --------- ----------
Minority
interests 1,168 - - - 1,168
---------------- -------- --------- -------- --------- ----------
Profit attributable
to equity shareholders
of the Group 3,258 479 3,052 257 7,046
---------------- -------- --------- -------- --------- ----------
EARNINGS PER SHARE
Basic earnings per share
Weighted average number
of shares (thousands) 56,163 56,163
---------------- -------- --------- -------- --------- ----------
BASIC EARNINGS PER
SHARE 5.80p 12.55p
---------------- -------- --------- -------- --------- ----------
Diluted earnings per share
Weighted average number
of shares (thousands)
as above 56,163 56,163
Add
- Sharesave options 159 159
- Options 411 411
- LTIP Options 975 975
- Contingent consideration 595 595
---------------- -------- --------- -------- --------- ----------
Total 58,303 58,303
---------------- -------- --------- -------- --------- ----------
DILUTED EARNINGS PER
SHARE 5.59p 12.09p
---------------- -------- --------- -------- --------- ----------
M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENT
Notes - Continued
2. HEADLINE RESULTS AND EARNINGS PER SHARE (continued)
Year ended 31 December 2006 Reported Amortisation of Fair value Headline
results acquired adjustments to results
intangibles minority put
option
liabilities
Note £000 £000 £000 £000
---------------- ----- -------- --------- -------- ----------
Revenue 75,893 - - 75,893
---------------- ----- -------- --------- -------- ----------
Operating
profit 6,254 20 - 6,274
---------------- ----- -------- --------- -------- ----------
Share of results of
associates 5 - - 5
Net interest (7,463) - 8,970 1,507
---------------- ----- -------- --------- -------- ----------
Profit before taxation (1,204) 20 8,970 7,786
---------------- ----- -------- --------- -------- ----------
Taxation (2,857) - - (2,857)
---------------- ----- -------- --------- -------- ----------
Profit after taxation (4,061) 20 8,970 4,929
---------------- ----- -------- --------- -------- ----------
Minority interests 1,148 - - 1,148
---------------- ----- -------- --------- -------- ----------
Profit attributable
to equity shareholders
of the Group (5,209) 20 8,970 3,781
---------------- ----- -------- --------- -------- ----------
EARNINGS PER SHARE
Basic earnings per share
Weighted average number
of shares (thousands) 53,677 53,677
---------------- ----- -------- --------- -------- ----------
BASIC EPS (9.70)p 7.04p
---------------- ----- -------- --------- -------- ----------
Diluted earnings per share
Weighted average number
of shares (thousands)
as above 53,677 53,677
Add
- Sharesave options 259 259
- Options 411 411
---------------- ----- -------- --------- -------- ----------
Total 54,347 54,347
---------------- ----- -------- --------- -------- ----------
DILUTED EARNINGS PER
SHARE (9.70)*p 6.96p
---------------- ----- -------- --------- -------- ----------
* Due to losses the numerical calculation of diluted earnings per share results
is a figure which is more than the basic earnings per share. As such the diluted
figure has been reported as equal to the basic figure.
M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENT
Notes - Continued
3. Segmental information
The Group's primary reporting format for reporting segments is by geographical
market
Year ended 31 December 2007 UK Asia and America Europe Total
Australia
Note £000 £000 £000 £000 £000
---------------- ----- -------- --------- -------- --------- ----------
REVENUE 52,765 24,663 4,132 6,060 87,620
---------------- ----- -------- --------- -------- --------- ----------
Operating profit 7,761 550 581 722 9,614
---------------- ----- -------- --------- -------- --------- ----------
LESS excluded items
- Amortisation of intangibles 608 - - - 608
---------------- ----- -------- --------- -------- --------- ----------
HEADLINE OPERATING
PROFIT 8,369 550 581 722 10,222
---------------- ----- -------- --------- -------- --------- ----------
Share of results of associates 25 - - 309 334
Net interest 6,7 1,448 10 2 (90) 1,370
---------------- ----- -------- --------- -------- --------- ----------
HEADLINE PROFIT BEFORE
TAXATION 9,842 560 583 941 11,926
---------------- ----- -------- --------- -------- --------- ----------
ADD BACK excluded items
- Amortisation of intangibles (608) - - (53) (661)
- Fair value adjustments to
minority put option
liabilities (3,052) - - - (3,052)
- Notional interest on
deferred consideration (257) - - - (257)
---------------- ----- -------- --------- -------- --------- ----------
Total of headline
adjustments (3,917) - - (53) (3,970)
---------------- ----- -------- --------- -------- --------- ----------
Profit before taxation 5,925 560 583 888 7,956
---------------- ----- -------- --------- -------- --------- ----------
Taxation (2,833) (368) (207) (122) (3,530)
---------------- ----- -------- --------- -------- --------- ----------
Profit after taxation 3,092 192 376 766 4,426
---------------- ----- -------- --------- -------- --------- ----------
Minority interests 997 59 67 45 1,168
---------------- ----- -------- --------- -------- --------- ----------
Profit attributable to
equity shareholders of
the Group 2,095 133 309 721 3,258
---------------- ----- -------- --------- -------- --------- ----------
LESS excluded items
- Headline adjustments above 3,917 - - 53 3,970
- Deferred tax on amortisation
of acquired intangibles (182) - - - (182)
---------------- ----- -------- --------- -------- --------- ----------
HEADLINE PROFIT
ATTRIBUTABLE TO EQUITY
SHARE HOLDERS OF THE
GROUP 5,830 133 309 774 7,046
---------------- ----- -------- --------- -------- --------- ----------
HEADLINE EPS 12.55p
M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENT
Notes - Continued
3 Segmental information (continued)
Year ended 31 December 2006
UK Asia and America Europe Total
Australia
Note £000 £000 £000 £000 £000
---------------- ----- -------- --------- -------- --------- ----------
REVENUE 44,352 25,638 3,632 2,271 75,893
---------------- ----- -------- --------- -------- --------- ----------
Operating profit 6,323 1,496 (261) (1,304) 6,254
---------------- ----- -------- --------- -------- --------- ----------
LESS excluded items
- Amortisation of
intangibles - - - 20 20
---------------- ----- -------- --------- -------- --------- ----------
HEADLINE OPERATING
PROFIT 6,323 1,496 (261) (1,284) 6,274
---------------- ----- -------- --------- -------- --------- ----------
Share of results of
associates 5 - - - 5
Net interest 6,7 1,455 62 7 (17) 1,507
---------------- ----- -------- --------- -------- --------- ----------
HEADLINE PROFIT BEFORE
TAXATION 7,783 1,558 (254) (1,301) 7,786
---------------- ----- -------- --------- -------- --------- ----------
ADD BACK excluded items
- Amortisation of intangibles - - - (20) (20)
- Fair value adjustments to
minority put option
liabilities (8,970) - - - (8,970)
- Notional interest on
deferred consideration - - - - -
---------------- ----- -------- --------- -------- --------- ----------
Total of headline
adjustments (8,970) - - (20) (8,990)
---------------- ----- -------- --------- -------- --------- ----------
Profit before taxation (1,187) 1,558 (254) (1,321) (1,204)
---------------- ----- -------- --------- -------- --------- ----------
Taxation (2,373) (598) (128) 242 (2,857)
---------------- ----- -------- --------- -------- --------- ----------
Profit after taxation (3,560) 960 (382) (1,079) (4,061)
---------------- ----- -------- --------- -------- --------- ----------
Minority interests 1,042 31 67 8 1,148
---------------- ----- -------- --------- -------- --------- ----------
Profit attributable to
equity shareholders of
the Group (4,602) 929 (449) (1,087) (5,209)
---------------- ----- -------- --------- -------- --------- ----------
LESS excluded items
- Headline adjustments above 8,970 - - 20 8,990
---------------- ----- -------- --------- -------- --------- ----------
HEADLINE PROFIT
ATTRIBUTABLE TO EQUITY
SHARE HOLDERS OF THE
GROUP 4,368 929 (449) (1,067) 3,781
---------------- ----- -------- --------- -------- --------- ----------
HEADLINE EPS 7.04p
M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENT
Notes - Continued
4. Operating costs
Year ended 31 December 2007 2006
£000 £000
Total staff costs 53,763 47,949
Other costs 24,243 21,690
------------------------- -------- --------
Total costs 78,006 69,639
------------------------- -------- --------
Other costs include
Amortisation of intangibles
- Acquired intangibles 608 20
- Capitalised software 106 61
Depreciation of plant equipment 1,463 1,151
Losses on disposal of fixed assets 36 5
M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENT
Notes - Continued
5. SHARE OF ASSOCIATES
Year ended 31 December 2007 2006
£000 £000
Share of associates' profit before taxation 491 7
Share of associates' taxation (157) (2)
Amortisation of intangible (53) -
------------------------- -------- --------
281 5
------------------------- -------- --------
6. FINANCE INCOME
Year ended 31 December 2007 2006
£000 £000
Bank interest receivable 1,771 1,540
Other interest receivable 38 -
------------------------- -------- --------
Total finance income 1,809 1,540
------------------------- -------- --------
7. FINANCE EXPENSE
Year ended 31 December 2007 2006
£000 £000
Bank interest payable (403) (3)
Interest payable on finance leases (2) (13)
Other interest payable (34) (17)
------------------------- -------- --------
Total interest payable (439) (33)
------------------------- -------- --------
Notional interest on deferred consideration (257) -
Fair value adjustments to minority shareholder put options
liabilities (3,052) (8,970)
------------------------- -------- --------
Total finance expense (3,748) (9,003)
------------------------- -------- --------
M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENT
Notes - Continued
8. TAXATION
Year ended 31 December 2007 2006
£000 £000
Current taxation
Taxation in the year
- UK (3,223) (2,280)
- Overseas (1,119) (916)
Withholding taxes payable (7) -
Utilisation of previously unrecognised tax losses 128 -
Adjustment for over provision in prior periods 138 68
------------------------- -------- --------
Total (4,083) (3,128)
------------------------- -------- --------
Deferred taxation
Origination and reversal of temporary timing differences 606 271
Effect of changes in tax rates (53) -
------------------------- -------- --------
Total 553 271
------------------------- -------- --------
Total taxation (3,530) (2,857)
------------------------- -------- --------
The difference between the actual tax and the standard rate of corporation tax
in the UK applied to profits for the year are as follows:
Year ended 31 December 2007 2006
£000 £000
Profit / (loss) before taxation 7,956 (1,204)
Taxation at UK Corporation tax rate of 30% (2,387) 361
Tax effect of associates 93 1
Expenses not deductible for tax (212) (249)
Different tax rates applicable in overseas jurisdictions (93) (56)
Effect of changes in tax rates on deferred tax (53) -
Withholding taxes (7) -
Utilisation of previously unrecognised tax losses 128 -
Adjustment for over provision in prior periods 138 68
Tax losses for which no deferred tax asset was recognised (145) (291)
Adjustment for (over) provision in prior periods (915) (2,691)
Tax losses for which no deferred income tax asset was
recognised (77) -
------------------------- -------- --------
(3,530) (2,857)
------------------------- -------- --------
9. DIVIDENDS
Year ended 31 December 2007 2006
£000 £000
2006 final dividend 2.43p (2005 1.78p) 1,300 965
2007 interim dividend 0.87p (2006 0.77p) 513 412
------------------------- -------- --------
1,813 1,377
------------------------- -------- --------
Proposed 2007 final dividend of 2.75p £1,642k.
Dividends relate to the profit of the following years:
Year ended 31 December 2007 2006
£000 £000
Interim dividends 513 412
Final dividends 1,642 1,300
------------------------- -------- --------
2,155 1,712
------------------------- -------- --------
Headline dividend cover 3.2 2.2
M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENT
Notes - Continued
10. ACQUISITIONS
CLEAR IDEAS LTD
On 12 July 2007 the Group acquired 100% of the share capital of Clear Ideas Ltd
(Clear). The acquisition was satisfied with an initial cash payment of £13.2m
and an issue of 3,444,791 shares. Deferred contingent consideration will be paid
over the period 2008 to 2011 subject to the performance of the business. As at
31 December 2007 the value of contingent consideration is £11.9m.
For the year ending 31 December 2007 Clear had revenues of £10.8m and an
operating profit of £2.4m.
Book & fair
value
£000
Non current assets
Intangibles 23
Property, Plant and equipment 423
------------------------- --------
446
------------------------- --------
Current assets
Trade and other receivables 4,034
Other current assets 864
Cash and cash equivalents 776
------------------------- --------
5,674
Current liabilities (2,263)
Non current liabilities -
------------------------- --------
3,857
------------------------- --------
M&C SAATCHI BERLIN (2006 ACQUISITION)
On 24 July 2006 the Group acquired 80% of 03 International Projects GmbH
(renamed M&C Saatchi Berlin GmbH). In 2007 final consideration of £358k was paid
(2006 contingent consideration £67k).
EXERCISE OF PUT OPTIONS
In July 2007 the Group acquired 19.5% of the share capital of Walker Media
Holdings Ltd from its minority shareholders satisfied by an initial payment of
£8.8m cash and an issue of 1,888,236 shares.
In May 2007 the Group acquired 6.3% of the share capital of Talk PR Ltd from the
company's minority shareholders with an issue of 105,956 shares.
ZAPPING / M&C SAATCHI
On 8 March 2007 the Group acquired 25% of the Zapping Publicidad SA group of
companies, with a commitment to acquire a further 26% on 1 July 2008 and 24% on
1 July 2009.
ACCOUNTING METHODS
IFRS 3 requires the acquiree's identifiable assets and liabilities to be
recognised at fair value at the acquisition date. The acquisition of Clear Ideas
Ltd in 2007 and M&C Saatchi Berlin GmbH in 2006 fall within the scope of IFRS3.
The acquisition of additional shares in Walker Media Holdings Ltd and Talk PR
Ltd due to the exercise of put options does not change the nature of our
control. The transactions fall outside the scope of IFRS3 business combinations.
Goodwill arose on the exercise of these put options, being the excess of the
fair value of the consideration over the Group's interest in the value of the
identifiable net assets acquired.
The acquisition of 25% of Zapping / M&C Saatchi is accounted for as an
associate.
INVESTMENT IN SUBSIDIARIES
Clear Walker Media Talk PR Contingent Total 2006
consideration
paid
£000 £000 £000 £000 £000 £000
Consideration,
satisfied by:
Cash 13,948 8,799 - 383 23,130 674
Fair value of
deferred and
contingent
consideration 10,535 5,127 - (67) 15,595 67
Shares issued 5,563 2,964 175 - 8,702 -
--------------- -------- -------- -------- -------- -------- -------
30,046 16,890 175 316 47,427 741
--------------- -------- -------- -------- -------- -------- -------
Direct costs
of acquisition 559 123 3 12 697 67
--------------- -------- -------- -------- -------- -------- -------
30,605 17,013 178 328 48,124 808
--------------- -------- -------- -------- -------- -------- -------
LESS
- Fair value
of net assets
/(liabilities) 3,857 (275) - - 3,582 39
- Intangible
assets acquired 5,833 - - - 5,833 20
- Deferred tax
acquired (1,648) - - - (1,648) -
--------------- -------- -------- -------- -------- -------- -------
Goodwill created 22,563 17,288 178 328 40,357 749
--------------- -------- -------- -------- -------- -------- -------
Goodwill acquired 23 - - - 23 -
--------------- -------- -------- -------- -------- -------- -------
Goodwill
additions 22,586 17,288 178 328 40,380 749
--------------- -------- -------- -------- -------- -------- -------
Goodwill represents the value of our staff and our investments in potential
future profits.
Investment in Associate
2007
Zapping / M&C Saatchi £000
Consideration, satisfied by:
Cash 1,368
Fair value of deferred consideration 2,216
--------------------- --------
3,584
--------------------- --------
Direct costs of acquisition 219
--------------------- --------
3,803
--------------------- --------
LESS
- Fair value of net assets 131
- Intangible assets acquired 95
--------------------- --------
Goodwill created 3,577
--------------------- --------
11. Deferred and Contingent consideration
2007 2006
£000 £000
Amounts falling within one year
- Deferred (7,311) -
- Contingent (2,500) (67)
------------------------- -------- --------
(9,811) (67)
------------------------- -------- --------
Amounts falling after one year
- Contingent (8,325) -
------------------------- -------- --------
(18,136) (67)
------------------------- -------- --------
2007 2006
£000 £000
------------------------- -------- --------
1 January (67) -
------------------------- -------- --------
Exchange difference (6) -
Acquisitions (17,879) (67)
Notional interest charge (257) -
Paid 351 -
Adjustment to prior period estimate (278) -
------------------------- -------- --------
31 December (18,136) (67)
------------------------- -------- --------
Contingent consideration is estimated based on projections.
M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENT
Notes - Continued
12. RESERVES
Share Share Merger Treasury Minority Foreign Retained Subtotal Minority Total
capital premium reserve reserve interest put exchange earnings interests
option reserve
reserve
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000
--------------- ------ ------ ------ ------ ------ ------ ------ ------- ------ ------
1 January 2006 542 9,618 14,756 - (13,219) - 4,800 16,497 549 17,046
Exchange
differences - - - - - (371) - (371) (39) (410)
Capital additions - - - - - - - - 90 90
Deferred tax
on options - - - - - - 36 36 - 36
Equity settled
share based payments - - - - - - 246 246 - 246
New minority shareholder
put options issued - - - - (99) - - (99) - (99)
Transfer between
majority and
minority reserves - - - - - - 213 213 (213) -
Dividends - - - - - - (1,377) (1,377) (959) (2,336)
Purchase of
own shares - - - (792) - - - (792) - (792)
Loss for the year - - - - - - (5,179) (5,179) 1,148 (4,031)
--------------- ------ ------ ------ ------ ------ ------ ------ ------- ------ ------
31 December 2006 542 9,618 14,756 (792) (13,318) (371) (1,261) 9,174 576 9,750
--------------- ------ ------ ------ ------ ------ ------ ------ ------- ------ ------
Issue of shares for
acquisitions 55 3,140 5,529 - - - - 8,724 - 8,724
Exchange rate movements - - - - - 689 - 689 (1) 688
Exercise of
minority put options - - - - 8,741 - 8,353 17,094 - 17,094
New minority shareholder
put options - - - - (2,299) - - (2,299) - (2,299)
Transfer between
majority and
minority reserves - - - - - - (350) (350) 350 -
Other - - - - - - 434 434 (134) 300
Equity settled
share based payments - - - - - - 432 432 - 432
Profit for the year - - - - - - 3,258 3,258 1,168 4,426
Dividends - - - - - - (1,813) (1,813) (1,404) (3,217)
--------------- ------ ------ ------ ------ ------ ------ ------ ------- ------ ------
31 December
2007 597 12,758 20,285 (792) (6,876) 318 9,053 35,343 555 35,898
--------------- ------ ------ ------ ------ ------ ------ ------ ------- ------ ------
The definitions of the reserves reported in the above note can be found in Note 15.
M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENT
Notes - Continued
13. Cash generated from operations
2007 2006
£000 £000
Revenue 87,620 75,877
Operating expenses (78,006) (69,639)
------------------------- -------- --------
Operating profit 9,614 6,238
------------------------- -------- --------
Adjustments for:
Depreciation of plant and equipment 1,463 1,212
(Profit) / losses on sale of plant and equipment (36) 5
(Profit) on sale of software intangibles (2) -
Amortisation of acquired intangible assets 608 20
Amortisation of capitalised software intangible assets 106 -
Non cash share based incentive plans 432 213
------------------------- -------- --------
Operating cash flow before movements in working capital
and provisions 12,185 7,688
------------------------- -------- --------
(Increase)/decrease in debtors (22,064) 4,146
Decrease in creditors 18,870 6,882
------------------------- -------- --------
Net cash flow from operating activities 8,991 18,716
------------------------- -------- --------
14. Cash consumed by acquisitions
2007 2006
£000 £000
Initial cash consideration including capitalised
acquisition costs
- Clear Ideas Ltd (14,508) -
- Walker Media Ltd (8,922) -
- Talk PR (3) -
- M&C Saatchi Berlin Gmbh (358) (748)
------------------------- -------- --------
(23,791) (748)
------------------------- -------- --------
Less cash and cash equivalents acquired 776 113
------------------------- -------- --------
(23,015) (635)
------------------------- -------- --------
Purchase of associate (Zapping) (1,587) -
------------------------- -------- --------
(24,602) (635)
------------------------- -------- --------
15. DEFINITION OF TERMS
Ordinary share capital
Total issued share capital at nominal value.
Share premium
Premium paid for shares above share capital, where that premium was not taken to
merger reserve.
Merger reserve
Premium paid for shares above share capital, caused by the acquisition of more
than 90% of subsidiaries shares, less any impairment or amortisation of the
investment (which is released to retained earnings).
Treasury Reserve
Amount paid for own shares acquired.
Minority Interest put Option reserve
Corresponds to related debit to the initial fair value of the liability in
respect of the put options at creation. When the put option is exercised the
related amount in this reserve is taken to goodwill.
Foreign Exchange reserve
Gains and losses on translating net assets of overseas operations.
Retained Earnings
Cumulative gains and losses recognised.
M&C SAATCHI PLC - 2007 PRELIMINARY STATEMENT
Notes - Continued
16. First Time adoption of international financial reporting standards
This is the first year that the Group presents its financial statements in
accordance with IFRS as adopted by the European Union. The following disclosure
is required in the transition year, as the last Group financial statements were
for the year ended 31 December 2006 and the date of transition is 1 January
2006.
The 2006 comparatives in the financial statements have been revised so that they
are compliant with the IFRS based Group accounting policies in note 1. The
following reconciliation show the impact of the transition from UK GAAP to IFRS.
FiRst time adoption exemptions taken (IFRS 1)
- We have not restated any business combinations prior to 1 January 2006
(IFRS 3).
- Translation differences on all foreign operations as at 1 January 2006 are
treated as nil (IAS 21).
Reconciliation from UK GAAP to IFRS
The following reconciliations are presented below in order to explain the effect
of the transition to IFRS and to show how the comparative results have been
restated:
- Reconciliation of profit for the year ended 31 December 2006;
- Reconciliation in movements of 1 January 2006 balance sheet; and
- Reconciliation in movements of 31 December 2006 balance sheet.
The IFRS adjustments included within these reconciliations are explained below.
More to follow