REG-M&C Saatchi PLC Interim Results 2008 - Part 2
Released : 25/09/2008 06:01
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Part 2 : For preceding part double click [nRn1Y2607E]
- Contingent consideration - -
Total 54,245 54,245
DILUTED EARNINGS PER SHARE 2.50p 3.45p
M&C SAATCHI PLC
NOTES TO THE INTERIM STATEMENTS
SIX MONTHS ENDED 30 JUNE 2008
Year ended 31 December 2007 Reported results Amortisation of acquired intangibles Fair value adjustments to minority put option liabilities Notional interest on deferred consideration Headline results
£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 holders of the Group
3,258 479 3,052 257 7,046
BASIC EARNINGS PER SHARE
Weighted average number of shares (thousands) 56,163 56,163
BASIC EPS 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
- Float 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
NOTES TO THE INTERIM STATEMENTS
SIX MONTHS ENDED 30 JUNE 2008
5. SEGMENTAL INFORMATION
Segmental analysis is provided by reference to the geographical origin of
business
The directors believe that the underlying performance of the reported
geographical segments is more clearly understood by reporting their performance
before amortisation and put option charges. A reconciliation to IFRS GAAP
reported operating profit and profit before tax is provided in each case.
Six months to 30 June 2008 UK Asia & Australia America Europe Total
£000s £000s £000s £000s £000s
REVENUE 29,933 14,789 2,108 4,939 51,769
OPERATING PROFIT 5,625 740 252 638 7,255
Add
- Amortisation of intangibles 287 179 - - 466
HEADLINE OPERATING PROFIT 5,912 919 252 638 7,721
Share of result of associates - - - (100) (100)
Net interest 394 36 (89) 341
Headline profit before Taxation 6,306 955 252 449 7,962
Less
- Amortisation of intangibles (287) (179) - (14) (480)
- Fair value adjustments to minority put option liabilities 234 - - - 234
- Notional interest on deferred consideration (169) - - - (169)
Total of headline adjustments (222) (179) - (14) (415)
Profit before Taxation 6,084 776 252 435 7,547
Taxation (1,730) (567) (100) (73) (2,470)
Profit for the period 4,354 209 152 362 5,077
Minority interests 175 92 17 30 314
Profit attributable to Equity holders of the Group 4,179 117 135 332 4,763
Add
- Headline adjustments above 222 179 - 14 415
- Deferred tax on amortisation of acquired intangibles (82) - - - (82)
Headline profit attributable to Equity holders of the Group 4,319 296 135 346 5,096
Headline BASIC EPS 8.62p
M&C SAATCHI PLC
NOTES TO THE INTERIM STATEMENTS
SIX MONTHS ENDED 30 JUNE 2008
UK Asia & Australia America Europe Total
Six months to 30 June 2007
£000s £000s £000s £000s £000s
Revenue 22,014 11,306 1,917 2,072 37,309
OPERATING PROFIT 3,077 (360) 58 47 2,822
Headline Operating Profit 3,077 (360) 58 47 2,822
Share of result of associates (56) - - 127 71
Net interest 951 12 2 (8) 957
Headline profit before Taxation 3,972 (348) 60 166 3,850
Less
- Fair value adjustments to minority put option liabilities (501) - - - (501)
- Amortisation of intangibles - - - (17) (17)
Total of headline adjustments (501) - - (17) (518)
Profit before Taxation 3,471 (348) 60 149 3,332
Taxation (1,034) (39) (141) (1) (1,215)
Profit for the period 2,437 (387) (81) 148 2,117
Minority interests 683 32 43 3 761
Profit attributable to Equity holders of the Group 1,754 (419) (124) 145 1,356
Add
- Headline adjustments above 501 - - 17 518
Headline profit attributable to Equity holders of the Group 2,255 (419) (124) 162 1,874
Headline bASIC EPS 3.50p
M&C SAATCHI PLC
NOTES TO THE INTERIM STATEMENTS
SIX MONTHS ENDED 30 JUNE 2008
Year to 31 December 2007 UK Asia & Australia America Europe Total
£000s £000s £000s £000s £000s
Revenue 52,765 24,663 4,132 6,060 87,620
OPERATING PROFIT 7,761 550 581 722 9,614
Add
- Amortisation of intangibles 608 - - - 608
Headline Operating Profit 8,369 550 581 722 10,222
Share of result of associates 25 - - 309 334
Net interest 1,448 10 2 (90) 1,370
Headline profit before Taxation 9,842 560 583 941 11,926
Less
- 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 for the period 3,092 192 376 766 4,426
Minority interests 997 59 67 45 1,168
Profit attributable to Equity holders of the Group 2,095 133 309 721 3,258
Add
- Headline adjustments above 3,917 - - 53 3,970
- Deferred tax on amortisation of acquired intangibles (182) - - - (182)
Headline profit attributable to Equity holders of the Group 5,830 133 309 774 7,046
Headline BASIC EPS 12.55p
M&C SAATCHI PLC
NOTES TO THE INTERIM STATEMENTS
SIX MONTHS ENDED 30 JUNE 2008
6. Finance costs
Six months Six months Year
ended ended ended
30 June 2008 30 June 2007 31 December
2007
£'000 £'000 £'000
Finance costs
Bank interest chargeable (395) (7) (403)
Interest payable on finance leases - - (2)
Other interest payable (8) - (34)
Total interest payable (403) (7) (439)
Notional interest on contingent consideration (169) - (257)
Fair value adjustments to minority shareholder put option 234 (501) (3,052)
liabilities
Total (338) (508) (3,748)
M&C SAATCHI PLC
NOTES TO THE INTERIM STATEMENTS
SIX MONTHS ENDED 30 JUNE 2008
7. Taxation
Income tax expenses are recognised based on management's best estimate of the
average annual income tax expected for the full financial year.
The estimated effective annual tax rate for the period to 30 June 2008 is 32.7%
(30 June 2007: 36.5%).
The headline average annual tax rate used for the period to 30 June 2008 is
32.1% (30 June 2007: 31.6%).
The increase in the headline average annual tax rate is mainly due to closing
offices reporting losses with no associated tax credits, partly offset by the
reduction in the UK Corporation taxation rate, applicable from April 2008, from
30% to 28%.
The difference between the headline and statutory tax rates is caused by a
difference in the profit before tax as neither the impact of fair value
adjustments to minority shareholder put option liabilities or amortisation of
intangible assets has any effect on the tax charge.
8. Dividends
Six months Six months Year
ended ended ended
30 June 2008 30 June 2007 31 December
2007
£'000 £'000 £'000
2007 final dividend 0.00*p (2006 2.43p) - 1,300 1,300
2007 interim dividend - (2006 0.77p) - - 513
- 1,300 1,813
*The 2007 final dividend of £1,658k (2.75p per share) was paid in July 2008 and
therefore not included in the income statement covering the period to 30 June
2008.
The directors propose an interim dividend of 0.87 pence per share (2007: 0.87
pence per share) payable on 21 November 2008 to shareholders who are on the
register at 10 October 2008. This interim dividend, amounting to £524k (2007:
£513k) has not been recognised as a liability in this half-yearly financial
report.
M&C SAATCHI PLC
NOTES TO THE INTERIM STATEMENTS
SIX MONTHS ENDED 30 JUNE 2008
9. ACQUISITIONS
On 12 Feburary 2008 the Group acquired control of F5, a French digital Agency
through the acquistion of 82% of its equity. Deferred consideration of £45k will
be settled in July 2008, with an estimated contingent payment of £100k to be
settled in 30 June 2009.
On 1 May 2008 the Group acquired a further 30% of Play London Ltd (Play), a
digital agency, for £43k. The Group had previously held 50% of the equity of
Play and accounted for the investment as an associate.
Exercise of put options
On 2 April 2008 the Group acquired the remaining 5.5% of the share capital of
Walker Media Holdings Ltd for a cash payment of £3,854k and an issue of 854,978
shares.
On 9 April 2008 the Group paid £5,369k being the contingent consideration on the
purchase of the 2007 purchase of 19.5% of the share capital of Walker Media
Holdings Ltd
Clear Ideas Ltd
On 16 June 2008, the Group paid contingent consideration of £1,750k in cash,
issued 466,867 shares and paid deferred consideration of £686k in cash.
Investment in subsidiaries
Clear Walker Media F5 PLAY
(digital France) (digital UK)
£000 £000 £000 £000
Consideration, satisfied by:
Cash paid for acquisition - 3,854 - 43
Cashsettle prior period deferred and contingent consideration 2,436 5,369 - -
Fair value of deferred and contingent consideration - - 145 -
Shares issued 469 945 - -
2,905 10,168 145 43
Direct costs of acquisition - 44 19 -
2,905 10,212 164 43
LESS
- Fair value of net assets / (liabilities) acquired - (70) - (29)
- settlement of prior period deferred and contingent 2,500 5,127 - -
consideration
- adjustment to prior period estimate of contingent 3,580 - - -
consideration
Goodwill (eliminated) / created (3,175) 5,155 164 72
M&C SAATCHI PLC
NOTES TO THE INTERIM STATEMENTS
SIX MONTHS ENDED 30 JUNE 2008
10. Deferred and contingent consideration
Six months Six months Year
ended ended ended
30 June 2008 30 June 2007 31 December
2007
£'000 £'000 £'000
Amounts falling within one year
Deferred (112) - (7,311)
Contingent - - (2,500)
(112) - (9,811)
Amounts falling after one year
Contingent (4,917) - (8,325)
(5,029) - (18,136)
Six months Six months Year
ended ended ended
30 June 2008 30 June 2007 31 December
2007
£'000 £'000 £'000
Brought forward (18,136) (67) (67)
Exchange difference - - (6)
Acquisitions (145) - (17,879)
Notional interest charge (169) - (257)
Settled
- Cash 10,181 - 351
- Shares 469 - -
Adjustment to prior period estimate 2,771 67 (278)
Carried forward (5,029) - (18,136)
M&C SAATCHI PLC
NOTES TO THE INTERIM STATEMENTS
SIX MONTHS ENDED 30 JUNE 2008
11. RESERVES
Share capital Share premium Merger reserve Treasury reserve Minority interest put option reserve Foreign exchange reserve Retained earnings Subtotal Minority interests Total
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000
31 December 2006 542 9,618 14,756 (792) (13,318) (371) (1,261) 9,174 576 9,750
Reserve movements for theSix month ending 30 June 2007
Issue of shares 1 176 - - - - - 177 - 177
Exchange rate movements - - - - - 111 - 111 (5) 106
New minority shareholder put options - - - - (2,310) - - (2,310) - (2,310)
Equity settled share based payments - - - - - - 190 190 - 190
Dividends - - - - - - (1,300) (1,300) (1,209) (2,509)
Profit for the period - - - - - - 1,356 1,356 761 2,147
30 June 2007 543 9,794 14,756 (792) (15,628) (260) (1,015) 7,398 123 7,521
31 December 2006 542 9,618 14,756 (792) (13,318) (371) (1,261) 9,174 576 9,750
Reserve movements for theYear ending 31 December 2007
Issue of shares for
- acquisitions 55 3,118 5,529 - - - - 8,702 - 8,702
- share save - 22 - - - - - 22 - 22
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 reverses - - - - - - (191) (191) 191 -
Other - - - - - - 275 275 25 300
Equity settled share based payments - - - - - - 432 432 - 432
Dividends - - - - - - (1,813) (1,813) (1,404) (3,217)
Profit for the year - - - - - - 3,258 3,258 1,168 4,426
31 December 2007 597 12,758 20,285 (792) (6,876) 318 9,053 35,343 555 35,898
Reserve movements for theSix months ending 30 June 2008
Exchange differences - - - - - 459 - 459 4 463
Issue of shares for acquisitions 13 936 464 - - - 71 1,484 - 1,484
Exercise of minority put options - - - - 2,440 - 2,619 5,059 - 5,059
Equity settled share based payments - - - - - - 125 125 - 125
Transfer between majority and minority reverses (79) (79) 79 -
Dividends - - - - - - - - (496) (496)
Profit for the period - - - - - - 4,763 4,763 314 5,077
30 June2008 610 13,694 20,749 (792) (4,436) 777 16,552 47,154 456 47,610
M&C SAATCHI PLC
NOTES TO THE INTERIM STATEMENTS
SIX MONTHS ENDED 30 JUNE 2008
12. Cash generated from operations
Six months Six months Year
More to follow