Final Results 2014 Replacement

Released : 26/03/2015 13:02

RNS Number : 5904I

M&C Saatchi PLC

26 March 2015

 

 

MULTIPLE NON MATERIAL TEXT AMENDMENTS

 

A number of non material typographical changes have been made to the Final Results 2014 announcement released on

26 March 2015 at 07:00 under RNS No 4886I.

 

The changes made are the removal of references to notes that will exist in Annual Report (due to be issued mid April 2015), but do not exist in this audited preliminary statement.

 

The full amended text is shown below.

 


 

M&C SAATCHI PLC

 

 

FINAL RESULTS

 

 

YEAR ENDED

31 DECEMBER 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26 March 2015

M&C Saatchi PLC

Final Results for the year ended 31 December 2014

 

 

 

26 March 2015

 

Financial Highlights 2014

Growth versus 2013

Revenue

Revenue in constant currencies

£169.4m

+ 5% (2013: £162.0m)

+ 10% (2013: £154.0m)

 

Operating Profit

£16.0m

+ 17% (2013: £13.7m)

 

Profit Before Tax

£17.2m

+ 17% (2013: £14.6m)

 

Profit After Tax and MI

EPS

£10.4m

15.88p

+ 27% (2013: £8.2m)

+ 28% (2013: 12.39p)

 

Dividend

  6.27p

+ 15% (2013: 5.45p)

 

 

 

 

 

         

The highlights are pro forma headline results, see note on next page for definition.

 

Operational Highlights

·      Strong results with good revenue momentum and a substantial increase in earnings growth

The global network performed well across all geographies:

·      UK: revenues up 9%, with CRM and Mobile continuing to excel; operating profit up 1%

·      Europe: like-for-like revenues up 15%, operating profit increased 54%

·      Middle East and Africa: like-for-like revenues up 14%, operating profit up 173%

·      Asia and Australasia: like-for-like revenues down 1%, operating profit increased 10%

·      Americas: like-for-like revenues up 51%, operating profit of £0.4m

·      Acquired 33% of SS+K in New York

·      Robust balance sheet maintained with net year-end cash of £5m

·      Final dividend increased 15% to 4.87p, full-year dividend up 15% to 6.27p

 

David Kershaw, Chief Executive, said:

 

"2014 was another year of excellent progress for M&C Saatchi. Our strategy of consistent growth through winning new business and starting new businesses continues to deliver good results.

 

"We have invested and upgraded and now feel we have the network span and depth of capabilities with which we can significantly develop our international client portfolio.

 

"We are confident we will continue to make good progress in 2015 and beyond."  

 

For further information please call:

M&C Saatchi                                     +44 (0)20-7543-4500

David Kershaw

 

Tulchan Communications                 +44 (0)20-7353-4200

Andrew Grant

Louise Högberg

 

Numis Securities                               +44 (0)20-7260-1000

Nick Westlake, NOMAD

Charles Farquhar, Corporate Broking

 

Notes to Editors

Pro forma headline results

The term headline is not a defined term in IFRS The items that are excluded from headline results are the amortisation or impairment of intangible assets (including goodwill, but excluding software) acquired in business combinations, changes to deferred and contingent consideration and other acquisition related charges taken to the income statement; impairment of investment in associate; and fair value gains and losses on liabilities caused by our put and call option agreements. Pro-forma headline treats the 2013 discontinued operations as if they had been disposed at the beginning of the period.

Like-for-like

Are the results expressed at constant exchange rates.

 

 

 

SUMMARY OF RESULTS

2014 saw another year of very good results with continued strong momentum and good revenue and earnings growth.

 

UK

Revenue in the UK was up 9%, with both CRM and Mobile continuing to do well. UK headline operating profit improved 1% on 2013. We experienced a positive run of account wins across our group of businesses, including Land Rover, John Lewis, Oxfam, Sky Bet, Ballantine's, Foot Locker, Doddle and the global business of Douwe Egberts. In April, we strengthened our digital offering by acquiring Lean Mean Fighting Machine, a highly respected and much awarded online agency. Our CRM offering through LIDA remains outstanding and they deservedly again won Customer Engagement Agency of the year. In addition, M&C Saatchi Mobile was awarded Mobile Agency of the Year EMEA. We are now exporting CRM and PR to our overseas offices, alongside Sport & Entertainment and Mobile. Our disciplined approach to cost and margins ensured a healthy headline operating margin of 14.9% (2013: 16.0%).

 

Europe

European like-for-like revenues increased 15% year on year. Stockholm has maintained its vigorous revenue momentum with further good new business wins across the year. Both Germany and Italy produced remarkable performances, with Italy winning BMW in the second half. In spite of a slow advertising market, the French office successfully won McCain and Thomas Cook as well as a place on the EDF roster. Additionally, our associate in Spain won the state train operator RENFE at the end of the year. Regionally, operating profit increased 54%, with a headline operating margin of 13.7% (2013: 9.7%).


 

 

 

Middle East and Africa

Like-for-like revenues increased 14% with substantial contributions from both Cape Town and Johannesburg. Key new business wins in South Africa were Pepsico and Deloitte Consulting. Abu Dhabi continues to build revenues beyond the Etihad account and won the account of TwoFour54, a government backed tax-free media and entertainment centre. In January 2015, we announced we were acquiring a majority stake in Ben-Natan Golan Advertising in Tel Aviv, Israel, forming a new agency M&C Saatchi Tel Aviv. Israel has the largest tech sector per capita in the world, often referred to as the second Silicon Valley. With our associate in Beirut and our office in Abu Dhabi, we now have a potent presence in the region. Overall, headline operating profit was up an exceptional 173%, with a headline operating margin of 12.8% (2013: 4.7%).

 

Asia and Australasia

In Asia and Australasia, like-for-like revenue was down 1% year on year. Australian revenues decreased without the David Jones account in 2014. However, our Australian offices have had an outstanding new business run in 2014, winning IAG, Lexus, A2 and Cricket Australia. With this performance and some very good work; they were rightly awarded Australian Agency of the Year. Regional revenues were also hit by account losses in New Zealand, which meant we took the strategic decision to close the office. Otherwise, the relationship with our associate in China, aeiou, progresses well with the win of some Microsoft business. Malaysia made a terrific contribution, maintaining their exceptional performance. In India, we reproduced our Chinese model acquiring 20% of February, a Delhi based agency. Singapore was appointed on an Asian regional basis for Jaguar and continues to win government assignments. The headline regional operating margin was up 2.3% from 9.2% to 11.5%, with the headline operating profit increasing 10%. 

 


 

 

Americas

Like-for-like revenues increased 51% with a small operating profit of £0.4m, with our offices in Los Angeles and Sao Paulo together with our US Mobile operation more than covering our organic investment in our New York office. The conversion of new business proved slow in New York, which led us to implement a management restructure. In November, we acquired 33% of SS+K, a much respected award winning agency that will significantly enhance our presence and accelerate our growth in New York. Already the model is working well, winning the international account of J W Marriott with our London office. Our office in Los Angeles maintained their good progress, winning UGG's social media business across the US. In February of this year, we upgraded our Sao Paulo presence, replicating the investment approach we took in China. We made a 25% investment in Santa Clara, a high quality independent agency who will be a powerful addition to our network.

 

Outlook

2014 was another year of excellent progress for M&C Saatchi. Our strategy of consistent growth through winning new business and starting new businesses continues to deliver good results.

We have invested and upgraded and now feel we have the network span and depth of capabilities with which we can significantly develop our international client portfolio.

We are confident we will continue to make good progress in 2015 and beyond.

 

 


 

 

 

AUDITED CONSOLIDATED INCOME STATEMENT

 

Year ended 31 December

Note

 


2014
£000

 

Continuing operations
2013
£000

Discontinued operations*
2013
£000

Total
2013
£000

Billings

 

 

333,302

 

320,288

198,618

518,906

Revenue

3

 

169,373

 

162,039

13,562

175,601

Operating costs

3

 

(163,720)

 

(149,282)

(9,588)

(158,870)

Operating profit

3

 

5,653

 

12,757

3,974

16,731

Share of results of associates and joint ventures

5

 

1,350

 

163

-

163

Gain on disposal of discontinued operations

 

 

-

 

-

7,048

7,048

Finance income

6

 

316

 

376

117

493

Finance costs

7

 

(1,087)

 

(15,852)

-

(15,852)

Profit / (loss) before taxation

3

 

6,232

 

(2,556)

11,139

8,583

Taxation

8

 

(4,293)

 

(4,207)

(1,046)

(5,253)

Profit / (loss) for the year

 

 

1,939

 

(6,763)

10,093

3,330

Attributable to:

 

 

 

 

 

 

 

Equity shareholders of the Group

3

 

(155)

 

(8,610)

10,093

1,483

Non controlling interests

3

 

2,094

 

1,847

-

1,847

Profit / (loss) for the year

3

 

1,939

 

(6,763)

10,093

3,330

Earnings per share

 

 

 

 

 

 

 

Basic (pence)

3

 

(0.24)p

 

(13.03)p

15.27p

2.24p

Diluted (pence)

3

 

(0.24)p

 

(13.03)p

14.38p

2.11p

 

 

 

 

Headline results**

 

 

Operating profit

16,025

13,657***

Profit before tax

17,143

14,605***

Profit after tax attributable to equity
shareholders of the Group

10,365

8,187***

Basic earnings per share (pence)

15.88p

12.39p***

 

* The results of Walker Media up to the sale of 75.1% on 28 November 2013 were presented as a discontinued operation in 2013.

**The reconciliation of headline to statutory results above can be found in note 3.

***On a pro forma basis (note 3).

 

The notes on pages 11 to 21 form part of these consolidated financial statements.

 


 

AUDITED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

 

 

 

 

 

Year ended 31 December

 


2014
£000

 

Continuing operations
2013
£000

Discontinued operations
2013
£000

Total
2013
£000

Profit / (loss) for the year

 

1,939

 

(6,763)

10,093

3,330

Other comprehensive income*:

 

 

 

 

 

 

Exchange differences on translating foreign operations before tax

 

(1,212)

 

(1,302)

-

(1,302)

Other comprehensive income for the year net of tax

 

(1,212)

 

(1,302)

-

(1,302)

 

 

 

 

 

 

 

Total comprehensive income for the year

 

727

 

(8,065)

10,093

2,028

Total comprehensive income attributable to:

 

 

 

 

 

 

Equity shareholders of the Group

 

(1,367)

 

(9,912)

10,093

181

Non controlling interests

 

2,094

 

1,847

-

1,847

Total comprehensive income / (loss) for the year

 

727

 

(8,065)

10,093

2,028

 

* All items in consolidated statement of comprehensive income will be reclassified to the income statement.

 

The notes on pages 11 to 21 form part of these consolidated financial statements.

 


 

AUDITED CONSOLIDATED BALANCE SHEET

 

 

 

At 31 December

Note

2014
£000

2013
£000

Non current assets

 

 

 

Intangible assets

 

29,142

35,269

Investments in associates

 

18,731

13,099

Plant and equipment

 

8,409

7,310

Deferred tax assets

 

1,515

1,313

Other non current assets

 

5,899

5,316

 

 

63,696

62,307

Current assets

 

 

 

Trade and other receivables

 

71,043

61,478

Current tax assets

 

318

1,355

Cash and cash equivalents

 

23,446

33,702

 

 

94,807

96,535

Current liabilities

 

 

 

Bank overdraft

 

(125)

(115)

Trade and other payables

 

(75,995)

(64,004)

Current tax liabilities

 

(1,995)

(3,552)

Other financial liabilities

 

(22)

(20)

Deferred and contingent consideration

 

-

(420)

Minority shareholder put option liabilities

10

(15,835)

(21,844)

 

 

(93,972)

(89,955)

Net current assets

 

835

6,580

Total assets less current liabilities

 

64,531

68,887

Non current liabilities

 

 

 

Deferred tax liabilities

 

(422)

(486)

Other financial liabilities

 

(18,226)

(356)

Minority shareholder put option liabilities

10

(8,708)

(16,325)

Other non current liabilities

 

(1,303)

(896)

 

 

(28,659)

(18,063)

Total net assets

 

35,872

50,824

 

Equity

 

 

 

Share capital

 

683

690

Share premium

 

16,807

16,402

Merger reserve

 

27,689

16,736

Treasury reserve

 

(792)

(792)

Minority interest put option reserve

 

(13,070)

(16,587)

Non controlling interest acquired

 

(7,882)

(1,532)

Foreign exchange reserve

 

(668)

544

Retained earnings

 

9,639

33,070

Equity attributable to shareholders of the Group

 

32,406

48,531

Non controlling interest

 

3,466

2,293

Total equity

 

35,872

50,824

 

The notes on pages 11 to 21 form part of these consolidated financial statements.

 

AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

Note

Share
capital
£000

Share
premium
£000

Merger
reserve
£000

 

Treasury
reserve
£000

MI put option
reserve
£000

Non controlling
interest
acquired
£000

Foreign
exchange
reserves
£000

Retained
earnings
£000

Subtotal
£000

Non controlling
interest
in equity
£000

Total
£000

At 1 January 2013

 

641

14,625

20,669

(792)

(13,675)

(1,085)

1,846

31,373

53,602

2,584

56,186

Acquisitions

 

-

-

-

-

(1,661)

-

-

-

(1,661)

321

(1,340)

Disposals*

 

-

-

(3,933)

-

-

-

-

3,933

-

(100)

(100)

Exercise of put options

10

5

1,281

-

-

447

(447)

-

-

1,286

-

1,286

Issues of shares to minorities

10

-

-

-

-

(484)

-

-

(170)

(654)

417

(237)

Exchange rate movements

 

-

-

-

-

-

-

-

-

-

(77)

(77)

Issue of minority put options

10

-

-

-

-

(1,214)

-

-

-

(1,214)

-

(1,214)

Option exercise

 

44

496

-

-

-

-

-

(418)

122

(155)

(33)

Share option charge

 

-

-

-

-

-

-

-

290

290

-

290

Dividends

9

-

-

-

-

-

-

-

(3,421)

(3,421)

(2,544)

(5,965)

Total transactions with owners

 

49

1,777

(3,933)

-

(2,912)

(447)

-

214

(5,252)

(2,138)

(7,390)

Total comprehensive income for the year

 

-

-

-

-

-

-

(1,302)

1,483

181

1,847

2,028

At 1 January 2014

 

690

16,402

16,736

(792)

(16,587)

(1,532)

544

33,070

48,531

2,293

50,824

Acquisitions

 

-

-

-

-

(1,653)

-

-

-

(1,653)

5

(1,648)

Exercise of put options

10

48

-

13,011

-

5,151

(4,791)

-

-

13,419

(429)

12,990

Deletion of right to equity

 

-

-

-

-

-

(1,559)

-

-

(1,559)

1,559

-

Exchange rate movements

 

-

-

-

-

19

-

-

-

19

(121)

(102)

Tender offer

 

(63)

-

-

-

-

-

-

(21,451)

(21,514)

-

(21,514)

Merger reserve release on impairments*

 

-

-

(2,058)

-

-

-

-

2,058

-

-

-

Option exercise

 

8

405

-

-

-

-

-

(413)

-

-

-

Share option charge

 

-

-

-

-

-

-

-

200

200

-

200

Dividends

9

-

-

-

-

-

-

-

(3,670)

(3,670)

(1,935)

(5,605)

Total transactions with owners

 

(7)

405

10,953

-

3,517

(6,350)

-

(23,276)

(14,758)

(921)

(15,679)

Total comprehensive income for the year

 

-

-

-

-

-

-

(1,212)

(155)

(1,367)

2,094

727

At 31 December 2014

 

683

16,807

27,689

(792)

(13,070)

(7,882)

(668)

9,639

32,406

3,466

35,872

The notes on pages 11 to 21 form part of these consolidated financial statements.


 

 

 

AUDITED CONSOLIDATED CASH FLOW STATEMENT AND ANALYSIS OF NET DEBT

 

 

 

Year ended 31 December

 

2014

£000

2013*

£000

Revenue

 

169,373

162,039

Operating expenses

 

(163,720)

(149,282)

Operating profit (continuing)

 

5,653

12,757

Adjustments for:

 

 

 

Operating profit from discontinued operations

 

-

3,974

Depreciation of plant and equipment

 

2,055

2,233

Loss on sale of plant and equipment

 

198

23

Loss on disposal of a subsidiary

 

76

 

Loss on acquisition of a subsidiary

 

813

-

Amortisation of acquired intangible assets

 

1,445

900

Impairment of goodwill

 

5,573

-

Amortisation of capitalised software intangible assets

 

120

143

Equity settled share based payment expenses

 

200

290

Operating cash before movements in working capital

 

16,133

20,320

(Increase) / decrease  in trade and other receivables

 

(8,690)

5,464

Increases / (decrease) in trade and other payables

 

8,676

(6,743)

Cash generated from operations

 

16,119

19,041

Tax paid

 

(5,332)

(5,080)

Net cash from operating activities

 

10,787

13,961

Investing activities

 

 

 

Acquisitions of subsidiaries net of cash acquired

 

(2,244)

(512)

Acquisitions of associates

 

(5,084)

(2,589)

Disposal of discontinued operations, net of cash disposed of

 

-

15,082

Acquisitions of investments

 

(1,187)

(800)

Proceeds from sale of plant and equipment

 

70

20

Purchase of plant and equipment

 

(3,350)

(2,771)

Purchase of capitalised software

 

(77)

(90)

Dividends received from associates

 

660

73

Interest received

 

307

473

Net cash (consumed) / from investing activities

 

(10,905)

8,886

Net cash (consumed) / from operating and investing activities

 

(118)

22,847

 

*The cash flows for 2013 represent only cash flows from continuing operations.

The notes on pages 11 to 21 form part of these consolidated financial statements.
 

 

 

 

 

 

 

 

 

Year ended 31 December

Note

2014

£000

2013

£000

Net cash (consumed) / from operating and investing activities

 

(118)

22,847

Financing activities

 

 

 

Dividends paid to equity holders of the Company

9

(3,670)

(3,421)

Dividends paid to non controlling interest

 

(1,935)

(2,544)

tender offer

 

(21,514)

-

Issue of own shares

 

1

-

Subsidiaries sale of own shares to non controlling interest

 

-

1

Repayment of finance leases

 

(61)

(42)

Inception of bank loans

 

17,913

4,261

Repayment of bank loans

 

-

(8,200)

Interest paid

 

(532)

(321)

Net cash consumed by financing activities

 

(9,798)

(10,266)

Net (decrease) / increase in cash and cash equivalents

 

(9,916)

12,581

Cash and cash equivalents at the beginning of the year

 

33,587

22,248

Effect of exchange rate fluctuations on cash held

 

(350)

(1,242)

Cash and cash equivalents at the end of the year

 

23,321

33,587

 

 

 

 

Bank loans and borrowings

 

(18,462)

(356)

NET CASH*

 

4,859

33,231

CAPITAL

 

 

 

TOTAL CAPITALISATION (at 31 December: 330.00p; 333.25p)

 

223,339

227,740

TOTAL CAPITAL

 

223,339

227,740

GEARING RATIO

 

nil

nil

 

 

 

 

 

 

 

 

 

 

 


 

NOTES TO THE PRELIMINARY STATEMENTS

YEAR ENDED 31 DECEMBER 2014

1. GENERAL INFORMATION

The Company is a public limited company incorporated and domiciled in the UK. The address of its registered office is 36 Golden Square, London W1F 9EE.

The Company has its primary listing on the AIM market of the London Stock Exchange.

These 2014 audited preliminary financial statements were approved for issue on 25 March 2015.

The financial information set out below does not constitute the company's statutory accounts for 2013 or 2014. Statutory accounts for the years ended 31 December 2013 and 31 December 2014 have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for 2013 and 2014 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

Statutory accounts for the year ended 31 December 2013 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2014 will be delivered to the Registrar in due course.

Headline results
The Directors believe that the headline results and headline earnings per share provide additional useful information on the underlying performance of the business. In addition, the headline results are used for internal performance management, the calculation of rewards in the Group's Long Term Incentive Plan (LTIP) scheme and minority shareholder put option liabilities. The term headline is not a defined term in IFRS. Note 3 reconciles reported to headline results.

Our segmental reporting (note 4) reflects our headline results in accordance with IFRS 8, and aggregation of similar activities by geography in accordance with IFRS12.

The items that are excluded from headline results are the amortisation or impairment of intangible assets (including goodwill, but excluding software) acquired in business combinations, changes to deferred and contingent consideration and other acquisition related charges taken to the income statement; impairment of investment in associate; and fair value gains and losses on liabilities caused by our put and call option agreements. Pro-forma headline treats discontinued operations as if they had been disposed at the beginning of the period.

2. ACCOUNTING POLICIES

The financial information set out in these final results has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). The accounting policies adopted in these final results have been consistently applied to all the years presented and are consistent with the policies used in the preparation of the statutory accounts for the period ended 31 December 2014. The principal accounting policies adopted are unchanged from those used in the preparation of the statutory accounts for the period ended 31 December 2013


 

NOTES TO THE PRELIMINARY STATEMENTS

continued

 

3. Headline results and earnings per share

The analysis below provides a reconciliation between the Group's statutory results and the headline results.

 

 

 

 

Year ended
31 December 2014

Note


2014
£000

Amortisation
of acquired intangibles

£000

Acquisition of remaining shares in loss making associate

£000

Impairment of Goodwill 
£000

Contingent acquisition cost classified as expense
£000

Fair value adjustments to minority put option liabilities
 £000

Headline
results

£000

Revenue

4

169,373

-

-

-

-

-

169,373

Operating profit

4

5,653

1,445

813

5,649*

2,465

-

16,025

Share of results of associates & JV

5

1,350

-

-

-

-

-

1,350

Finance income

6

316

-

-

-

-

-

316

Finance cost

7

(1,087)

-

-

-

-

539

(548)

Profit before taxation

4

6,232

1,445

813

5,649

2,465

539

17,143

Taxation

8

(4,293)

(391)

-

-

-

-

(4,684)

Profit for the year

 

1,939

1,054

813

5,649

2,465

539

12,459

Non controlling interests

 

(2,094)

-

-

-

-

-

(2,094)

(Loss) / profit attributable to equity holders of the Group

 

(155)

1,054

813

5,649

2,465

539

10,365

 

*Of the £5,649k, £76k relates to a loss on disposal of an Indian subsidiary and £5,573k relates to impairment of goodwill .

 

The Directors believe that the headline results and headline earnings per share provide additional useful information
on the underlying performance. The headline result is used for internal performance management, calculating the value
of subsidiary convertible shares and minority interest put options. The term headline is not a defined term in IFRS.

 

The items that are excluded from headline results are the amortisation or impairment of intangible assets (including goodwill,
but excluding software) acquired in business combinations, changes to deferred and contingent consideration and other acquisition related charges taken to the income statement; impairment of investment in associate; and fair value gains and losses on liabilities caused by our put and call option agreements.

 


 

 

 

 

 

Year ended
31 December 2013

Note

Continuing operations
2013
£000

Amortisation
of acquired intangibles

£000

Fair value adjustments to minority
put option liabilities

£000

Full year effect of discontinued
 operations**
 £000

Pro forma headline
results**

£000

Revenue

4

162,039

-

-

-

162,039

Operating profit

4

12,757

900

-

-

13,657

Share of results of associates & JV

5

163

-

-

758

921

Finance income

6

376

-

-

-

376

Finance cost

7

(15,852)

-

15,503

-

(349)

Profit before taxation

4

(2,556)

900

15,503

758

14,605

Taxation

8

(4,207)

(230)

-

-

(4,437)

Profit for the year

 

(6,763)

670

15,503

758

10,168

Profit from discontinued operations, net of tax

 

10,093

-

-

(10,093)

-

Non controlling interests

 

(1,847)

(134)

-

-

(1,981)

Profit attributable to
equity holders of the Group

 

1,483

536

15,503

(9,335)

8,187

 

This analysis provides a reconciliation between the Group's statutory continuing results and the pro forma headline results. The pro forma headline results, treats the discontinued operations as if they had been disposed of at the beginning of the year. The pro forma headline results with full year treatment of Walker Media as a 24.9% associate have been what management have used for decision making and control. The term pro forma headline is not a defined term in IFRS

 

**75.1% of Walker Media was sold on 28 November 2013. This adjustment reverses out the profit from discontinued operations, net of tax for the period to 28 November 2013 which including the profit on disposal, and puts in equivalent 24.9% associates profit for the period.

 

 


 

NOTES TO THE PRELIMINARY STATEMENTS

Continued

 

3. Headline results and earnings per share continued

Basic and diluted earnings per share is calculated by dividing profit attributable to equity holders of the Group by the weighted average number of shares in issue during the year.

 

Year ended
31 December 2014

 

 

 


2014
£000

Headline
2014

£000

(Loss) / profit attributable to equity shareholders of the Group

 

 

(155)

10,365

Basic earnings per share

 

 

 

 

 

Weighted average number of shares (thousands)

 

 

 

65,285

65,285

Basic EPS

 

 

 

(0.24)p

15.88p

Diluted earnings per share

 

 

 

 

 

Weighted average number of shares (thousands) as above

 

 

 

65,285

65,285

Add

 

 

 

 

 

- LTIP

 

 

 

55

55

- 2012 LTIP

 

 

 

230

230

- New LTIP

 

 

 

2,772

2,772

Total

 

 

 

68,342

68,342

Diluted earnings per share***

 

 

 

(0.24)p

15.17p

 

 

 

 

 

Year ended
31 December 2013

 

Continuing operations
2013
£000

Discontinued operations
2013
£000

Total
2013
£000

Pro forma headline
2013

£000

Profit attributable to equity shareholders of the Group

 

(8,610)

10,093

1,483

8,187

Basic earnings per share

 

 

 

 

 

Weighted average number of shares (thousands)

 

66,094

66,094

66,094

66,094

Basic EPS

 

(13.03)p

15.27p

2.24p

12.39p

Diluted earnings per share

 

 

 

 

 

Weighted average number of shares (thousands) as above

 

66,094

66,094

66,094

66,094

Add

 

 

 

 

 

- UK growth shares

 

631

631

631

631

- Options

 

128

128

128

128

- LTIP

 

102

102

102

102

- 2012 LTIP

 

230

230

230

230

- New LTIP

 

2,751

2,751

2,751

2,751

- Dilutive put options**

 

359

359

359

359

Total

 

70,295

70,295

70,295

70,295

Diluted earnings per share***

 

(13.03)p

14.38p

2.11p

11.65p

 

**Apart from one entity, in 2013, all the other put options detailed in note 10 are non dilutive as the exercise price approximates fair value of the underlying non controlling interest.

*** There is no dilutive effect on losses.

NOTES TO THE PRELIMINARY STATEMENTS

continued

 

4. Segmental information

 

Segmental and headline income statement

 

Year ended
31 December 2014

 

UK

£000

Europe

£000

Middle East and Africa
£000

Asia and Australasia

£000

Americas

£000

 

Total

£000

Revenue

 

79,144

21,092

8,004

44,173

16,960

 

169,373

Operating profit excluding Group costs

 

11,757

2,892

1,027

5,064

445

 

21,185

Group costs

 

(4,710)

(72)

-

(331)

(47)

 

(5,160)

Operating profit

 

7,047

2,820

1,027

4,733

398

 

16,025

Share of results of associates &JV

 

1,074

(19)

-

224

71

 

1,350

Financial income and cost

 

(146)

(54)

(11)

58

(79)

 

(232)

Profit before taxation

 

7,975

2,747

1,016

5,015

390

 

17,143

Taxation

 

(1,593)

(954)

(271)

(1,652)

(214)

 

(4,684)

Profit for the year

 

6,382

1,793

745

3,363

176

 

12,459

Non controlling interests

 

(1,276)

(406)

(354)

(533)

475

 

(2,094)

Profit attributable to equity shareholders
of the Group

 

5,106

1,387

391

2,830

651

 

10,365

Headline basic EPS

 

 

 

 

 

 

 

15.88p

 

Non cash costs included in operating profit:

 

 

 

 

 

 

Depreciation

 

(1,126)

(239)

(185)

(264)

(241)

 

(2,055)

Amortisation of software

 

(2)

(47)

(25)

(33)

(13)

 

(120)

Share option charges

 

(200)

-

-

-

-

 

(200)

Office location

 

London

Paris

Berlin

Madrid

Geneva

Milan
Moscow

Stockholm

Beirut

Cape Town

Johannesburg

Abu Dhabi

Sydney

Melbourne

New Delhi

Kuala Lumpur

Hong Kong

Beijing

Shanghai

Tokyo

Singapore

Los Angeles

São Paulo

New York

San Francisco

 

 

 

Segmental results are reconciled to the income statement in note 3. Our segmental and headline results are one and the same.
The above segments reflect the fact that our business is run on an operating unit basis. In accordance with IFRS 8 paragraph 12
we have aggregated our operating units into regional segments. During the year Clear was integrated into the Groups regional reporting, and was reported to the board as a component of the regions, 2013 has been restated to reflect this.

 


 

 

 

 

Segmental and headline pro-forma income statement

 

Year ended
31 December 2013*

 

UK

£000

Europe

£000

Middle East and Africa
£000

Asia and Australasia

£000

Americas

£000

 

Total

£000

Revenue

 

72,681

19,434

8,055

49,961

11,908

 

162,039

Operating profit excluding Group costs

 

11,642

1,881

376

4,621

79

 

18,599

Group costs

 

(4,546)

(71)

-

(234)

(91)

 

(4,942)

Operating profit

 

7,096

1,810

376

4,387

(12)

 

13,657

Share of results of associates & JV

 

983

23

(152)

67

-

 

921

Financial income and cost

 

(44)

(55)

104

37

(15)

 

27

Profit before taxation

 

8,035

1,778

328

4,491

(27)

 

14,605

Taxation

 

(1,706)

(666)

(186)

(1,701)

(178)

 

(4,437)

Profit for the year

 

6,329

1,112

142

2,790

(205)

 

10,168

Non controlling interests

 

(1,232)

(208)

(214)

(822)

495

 

(1,981)

Profit attributable to equity shareholders
of the Group

 

5,097

904

(72)

1,968

290

 

8,187

Headline basic EPS

 

 

 

 

 

 

 

12.39p

 

Non cash costs included in operating profit:

Depreciation**

 

(1,033)

(232)

(172)

(462)

(158)

 

(2,057)

Amortisation of software

 

(38)

(39)

(29)

(14)

(23)

 

(143)

Share option charges

 

(290)

-

-

-

-

 

(290)

Office location

 

London

Paris

Berlin

Madrid

Geneva

Milan
Moscow
Stockholm

Beirut

Cape Town

Johannesburg

Abu Dhabi

Sydney

Melbourne

Auckland

Wellington

New Delhi

Mumbai

Kuala Lumpur

Hong Kong

Beijing

Shanghai

Tokyo

Singapore

Los Angeles

São Paulo

New York

 

 

 

*These numbers have been restated to allocate Clear into its regional segments, reflecting how it is now reported to the Board, and to treat
Walker Media as if it was an associate for the full year.

**These figures have been restated removing £176k of Walker Media depreciation.

 

 

 


 

 

 

 

NOTES TO THE PRELIMINARY STATEMENTS

continued

 

4. Segmental information continued

 

Segmental income statement translated at 2013 exchange rates

It is normal practice in our industry to provide like-for-like results. In the year we had not acquired any significant new businesses therefore the only difference in our like-for-like results is the impact from movements in exchange rates. Had our 2014 results been translated at 2013 exchange rates then our results would have been:

 

Year ended
31 December 2014

UK

£000

Europe

£000

Middle East and Africa
£000

Asia and Australasia

£000

Americas

£000

 

Total

£000

Revenue

79,144

22,344

9,204

49,408

17,974

 

178,074

Operating profit excluding Group costs

11,757

3,061

1,204

5,746

437

 

22,205

Group costs

(4,710)

(76)

-

(372)

(49)

 

(5,207)

Operating profit

7,047

2,985

1,204

5,374

388

 

16,998

Share of results of associates & JV

1,074

(20)

-

237

75

 

1,366

Financial income and cost

(146)

(54)

(13)

65

(92)

 

(240)

Profit before taxation

7,975

2,911

1,191

5,676

371

 

18,124

Taxation

(1,593)

(1,009)

(321)

(1,841)

(216)

 

(4,980)

Profit for the year

6,382

1,902

870

3,835

155

 

13,144

Increase / (decrease) in 2014 results caused by translation differences

-

(110)

(125)

(471)

21

 

(685)

 

The key currencies that affect us and the average exchange rates used were:

 

 

2014

2013

US dollar

1.6478

1.5643

Malaysian ringgit

5.3883

4.9279

Australian dollar

1.8264

1.6212

South African rand

17.8639

15.0952

Brazilian real

3.8717

3.3772

Euro

1.2406

1.1776

 

 

 

 


 

NOTES TO THE PRELIMINARY STATEMENTS

continued

 

5. Share of associates and joint ventures

 

Year ended 31 December

2014

£000

2013

£000

Share of associates' profit before taxation

1,723

195

Share of associates' taxation

(373)

(32)

 

1,350

163

 

6. Finance income

 

Year ended 31 December

2014

£000

2013

£000

Bank interest receivable

256

173

Other interest receivable

60

203

Total interest receivable

316

376

In respect of discontinued operations

-

117

Total finance income

316

493

 

7. Finance costs

 

Year ended 31 December

2014

£000

2013

£000

Bank interest payable

(541)

(342)

Interest payable on finance leases

(7)

(7)

Total interest payable

(548)

(349)

Fair value adjustments to minority shareholder put option liabilities (note 10)

(539)

(15,503)

Total finance costs

(1,087)

(15,852)

 


 

 

 

8. Taxation

 

Year ended 31 December

 


2014
£000

 

Continuing operations
2013
£000

Discontinued operations
2013
£000

Total
2013
£000

Current taxation

 

 

 

 

 

 

Taxation in the year

 

 

 

 

 

 

- UK

 

1,373

 

1,945

1,046

2,991

- Overseas

 

3,292

 

2,756

-

2,756

Withholding taxes payable

 

6

 

9

-

9

Utilisation of previously unrecognised tax losses

 

(108)

 

-

-

-

Adjustment for under provision in prior periods

 

168

 

72

-

72

Total

 

4,731

 

4,782

1,046

5,828

 

 

 

 

 

 

 

Deferred taxation

 

 

 

 

 

 

Origination and reversal of temporary differences

 

(658)

 

(658)

-

(658)

Recognition of previously unrecognised
tax losses

 

220

 

83

-

83

Effect of changes in tax rates

 

-

 

-

-

-

Total

 

(438)

 

(575)

-

(575)

Total taxation

 

4,293

 

4,207

1,046

5,253

 


 

NOTES TO THE PRELIMINARY STATEMENTS

continued

 

9. Dividends

 

Year ended 31 December

2014
£000

2013
£000

2013 final dividend paid 4.24p on 4 July 2014 (2012: 3.85p)*

2,723

2,596

2014 interim dividend paid 1.40p on 14 November 2014 (2013: 1.21p)

947

825

 

3,670

3,421

 

Proposed final dividend of 4.87p totalling £3,442k. Subject to shareholders approval at 10 June 2015 AGM, the dividend is payable on 10 July 2015 to shareholders on the register 12 June 2015.

 

Dividends relate to the profit of the following years:

 

Year ended 31 December

2014
£000

2013
£000

First interim dividend paid 1.40p on 14 November 2014 (2013: 1.21p)

947

825

Final dividends payable 4.87p on 10 July 2015 (2013:4.24p)

3,442

2,629

 

4,389

3,454

Headline dividend cover

2.4

2.4

 

Headline dividend cover is calculated by taking headline profit after tax attributable to equity shareholders and dividing it by the total dividends that relate to that year's profits. The Group seeks to maintain a long term headline dividend cover of between 2 and 3.

 

* 2013 dividend has been restated to reflect the number of shares in issue when the dividend was paid, as opposed to the number of shares in existence at 31 December 2013.


 

 

 

NOTES TO THE PRELIMINARY STATEMENTS

continued

10. Minority shareholder put option liabilities

 

Some of our subsidiaries' minorities have the right to a put option. The put options give the minorities a right to exchange their minority holdings in the subsidiary into shares in M&C Saatchi plc or cash (as per the agreement).

 

 

2014

£000

2013

£000

Amounts falling due within one year

 

 

- Cash

(1,031)

(3,642)

- Equity

(14,804)

(18,202)

 

(15,835)

(21,844)

Amounts falling due after one year

 

 

- Cash

(178)

(684)

- Equity

(8,530)

(15,641)

 

(8,708)

(16,325)

 

 

(24,543)

(38,169)

 

 

2014

£000

2013

£000

At 1 January

(38,169)

(20,482)

Exchange difference

1

4

Additions

(1,653)

(3,359)

Exercises

15,817

1,171

Termination

-

-

Income statement charge due to

 

 

- Change in estimates

(886)

1,333

- Change in share price

442

(16,760)

- Time

(95)

(76)

Total income statement charge

(539)

(15,503)

 

At 31 December

(24,543)

(38,169)

 

The movements in the year relating to the minority interest put options that are payable in cash and in equity are as follows:

 

Cash based

2014

£000

2013

£000

At 1 January

(4,326)

(3,297)

Exchange difference

-

158

Reclassified from share based

(291)

-

Additions

-

(684)

Exercises

2,553

-

Income statement charge due to

 

 

- Change in estimates

841

(136)

- Change in share price

9

 

- Time

5

(367)

At 31 December

(1,209)

(4,326)

 

 

 

 

 

Equity based

2014

Equity*

2014

£000

2013

£000

At 1 January

(10,156)

(33,843)

(17,185)

Exchange difference

 

1

(154)

Additions

(589)

(1,653)

(2,675)

Exercises

4,852

13,264

1,171

Reclassified to cash based

33

291

-

Terminations

-

-

-

Income statement charge due to

 

 

 

- Change in estimates

(1,301)

(1,727)

1,469

- Change in share price

120

433

(16,393)

- Time

(30)

(100)

(76)

At 31 December

(7,071)

(23,334)

(33,843)

 

* The estimated number of M&C Saatchi plc shares that will be issued,
in thousands, to fulfil.


 

 

 

Put options are exercisable from:

Subsidiary

Year

% of subsidiaries' shares

exchangeable

M&C Saatchi LA Inc**

2015

6.0

M&C Saatchi Marketing Arts Ltd

2015

50.0

M&C Saatchi (M) SDN BHD

2015

20.0

M&C Saatchi Sports & Entertainment Ltd

2015

2.8

Influence Communications Ltd

2015

5.0

M&C Saatchi Europe Holdings Ltd

2015

4.0

M&C Saatchi German Holdings Ltd

2015

4.0

M&C Saatchi Communications Pty Ltd

2015

13.0

M&C Saatchi Berlin GmbH

2015

15.0

Talk PR Audience Ltd

2015

17.0

FCINQ SAS

2015

15.0

Clear Ideas Consulting LLP

2015

12.5

M&C Saatchi PR LLP (US)

2015

35.0

Clear Ideas Consulting LLP

2015

12.5

M&C Saatchi Mobile Ltd*

2015

10.0

M&C Saatchi Sport & Entertainment
Pty Ltd

2015

49.0

Talk PR Ltd

2015

49.0

M&C Saatchi UK PR LLP

2015

35.0

M&C Saatchi Corporate SAS

2015

29.8

M&C Saatchi (Switzerland) SA

2016

40.0

Samuelson Talbot and Partners Pty Ltd

2016

31.2

M&C Saatchi Merlin Ltd

2016

22.5

The Source (London) Ltd

2016

30.0

Direct One SAS

2016

10.0

Direct One SAS

2017

10.0

M&C Saatchi Berlin GmbH

2017

5.0

M&C Saatchi Brazil Cominicação LTDA**

2017

40.0

Lean Mean Fighting Machine LTD*

2017

13.3

Lean Mean Fighting Machine LTD*

2018

13.3

Samuelson Talbot and Partners Pty Ltd

2018

8.8

M&C Saatchi Merlin Ltd

2018

22.5

Direct One SAS

2018

10.0

Lean Mean Fighting Machine LTD*

2019

13.3

* New or amended options in 2014.

** Holding changed or shares put in 2014.

 


 

 

NOTES TO THE PRELIMINARY STATEMENTS

continued

10. Minority shareholder put option liabilities continued

 

At each period end the fair value of the put option liability is calculated in accordance with the shareholders' agreement, and any movement is charged to the income statement. Where the agreement gives a right to convert to a variable number of shares (rather than a value), the number of shares is converted to a value by using the period end share price (2014: 330.0p, 2013: 333.3p).

 

The liability will vary with our share price and with the results of the subsidiary companies. Current liabilities are determined by our year end share price and the 2013 results of the companies who can exercise in 2014. Non current liabilities are determined by our year end share price and the projected results of the companies who can exercise after 2014. The projected results show management's best estimate of the growth rates and margin of the companies who can exercise after 2014 Given that these companies are small, single account wins / losses can have a significant effect on their results. Such account wins are far more significant than changes to exchange rates and underlying economic growth rates.

 

The fair value of minority shareholder put option liabilities is measured using some inputs that are not based on observable market data (i.e. IFRS13, Level 3 fair value measurement).

 

 

 

 

Share price risk

Changes in our year end share price will impact the fair value adjustment to minority shareholder put options. The year end share price was 330.0p (2013: 333.3p). The 2014 charges would have changed as follows, had the share price been:
 

Share price

Movement
%

Increase /
(decrease) in profit before and after tax £000

396.0p

+20%

£(4,939)

363.0p

+10%

£(2,803)

330.0p

-

-

297.0p

(10)%

£2,886

264.0p

(20)%

£5,776

 

 

Forecast accuracy

Difference in actual and projected results of the companies could have an impact on the fair value adjustments as follows:

 

 

 

Result

 

Increase /
(decrease) in profit before and after tax £000

+10%

 

£(992)

(10)%

 

£992

 

 

 


This information is provided by RNS

The company news service from the London Stock Exchange

 

END

 

 

FR LQLFLEXFEBBV