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Market Cap
£50.48m
Change Today
0.000p ()
Share Price
83.00p
Interim Results
M&C Saatchi PLC
25 September 2007
M&C SAATCHI PLC
INTERIM RESULTS
SIX MONTHS TO
30 JUNE 2007
25 September 2007
M&C Saatchi plc, the international marketing communications group, today
announces its results for the six months ended 30 June 2007.
Headline financial results
• Revenue (gross profit) up 8% to £37.3m (2006: £34.7m)
• Operating profit up 61% to £2.8m (2006: £1.8m)
• Profit before Tax up 59% to £3.9m (2006: £2.4m)
• Profit after tax and minority interest up 122% to £1.9m (2006: £0.9m)
• Earnings per share up 124% to 3.50p (2006: 1.56p)
• Interim dividend increased by 13% to 0.87p. (2006: 0.77p)
Reported results
• Revenue (gross profit) up 8% to £37.3m (2006: £34.7m)
• Operating profit up 61% to £2.8m (2006: £1.8m)
• Profit before Tax up 64% to £3.3m (2006: £2.0m)
• Profit after tax and minority interest up 194% to £1.4m (2006: £0.5m)
• Earnings per share up 198% to 2.53p (2006: 0.85p)
The headline results exclude the impact of the fair value adjustment to the
minority shareholder put options liabilities of £0.5m (2006: £0.4m) and the
amortisation of intangible assets of £17k (2006: £Nil). A further reconciliation
is included in note 4 to the financial statements.
Commenting on the results, David Kershaw the Chief Executive said:
"The results for the period show significant progress for the Group. Trading has
been strong. The UK businesses continue to show good growth. The Asia and
Australia region had a tougher half but we are pleased that both the US and
European businesses are moving into profit. Strategically we have been active
with the acquisitions of Clear with offices in London, Amsterdam and New York,
and Zapping in Madrid. We have increased our interest in Walker Media. These
acquisitions have extended our international reach and moved us further into
higher margin disciplines. The outlook for the rest of the year remains in line
with expectations."
For further information please call:
M&C Saatchi plc 020 7543 4500
David Kershaw, Chief Executive
Tulchan Communications 020 7353 4200
Celia Gordon Shute
NUMIS 020 7260 1000
Lee Aston
Summary of results
------------------
These results show a strong performance for the first six months with revenue
growth of 7.7%, operating profit growth of 60.7% and headline earnings per share
growth of 124.4% (the headline earnings exclude the fair value adjustment to
minority shareholder put options liabilities and the write off of intangible
assets).
This encouraging year-on-year performance reflects the continued strength of our
UK business, the improvement in the results coming from the USA following its
reorganisation and the end of the investment phase in Europe. The Asia and
Australia region had a challenging first six months following account losses in
2006.
Key to the significant improvement in the headline earnings is the elimination
of the losses previously incurred in the USA and the end of the investment in
start-up and development costs in Europe.
The business in the USA has now been reorganised with our presence in New York
reduced to only that required to service key clients eliminating the significant
losses incurred in 2006. In the first six months of 2007 the USA contributed
£0.06m to Group PBT (2006: £(0.24)m ).
The last part of our planned expansion into continental Europe was completed
when we acquired an initial 25% of Spanish Agency Zapping Publicidad (Zapping)
in March (the results are included within the associate line). We now have a
presence in Paris, Berlin and Madrid and all three are performing well.
Financial review
----------------
Revenue grew by 9.1% on a constant currency basis (reported 7.7%) with strong
growth from the UK, America and Europe. Revenue from the Asia and Australia
region declined by 5.8% (constant currencies).
Operating profit increased by 60.7%. The significant increase is due to the
continued growth in the UK but more importantly due to the reversal of losses in
both America and Europe, as they both exit investment phases. The cumulative
turnaround represents a contribution to Group operating profit of £1.3m.
The operating margin increased to 7.6% (2006: 5.1%).
The share of associates now includes the Group's share of results from Play
London Ltd in the UK and from March, Zapping in Spain.
Net interest increased by 44.6% to £1.0m (2006: £0.7m).
The Group headline tax rate improved to 31.7% (2006: 47.2%) due to the
elimination of the significant non deductible losses incurred in 2006.
The profit attributable to minorities increased by 75.8% to £0.8m (2006: £0.4m).
This increase was mainly driven by the very strong performance of Walker Media.
(On the 3rd July 2007 the Group acquired an additional significant proportion of
the remaining minority (19.5% out of 25%).
The headline profit after tax (attributable to equity holders) increased by
121.8% and the headline EPS by 124.4% to 3.50p (2006: 1.56p). A reduction in the
average number of shares in 2007 (due to a share buy back in October 2006) is
the reason for the EPS growth exceeding the headline PAT growth.
The closing cash balance at the end of June was £25.8m a reduction of £5.5m over
the period from 31 December 2006. Cash inflow from normal activities was £1.7m.
The significant cash outflows were dividend payments £2.5m, the investment in
Zapping £1.5m, and a reduction in the contribution from working capital of
£3.2m.
On the 3rd July 2007 we acquired an additional 19.5% of the share capital of
Walker Media for £8.8m in cash and 1.9m new shares. On the 5th July 2007 we
acquired all the issued share capital in Clear Ideas Ltd (Clear) for an initial
consideration of £13.6m in cash and 3.4m new shares. These acquisitions have
been funded in part from internal funds and from a £13m credit facility provided
by RBS.
Operating review
----------------
Strategy
At the time of the float in July 2004 we made clear our ambitions to grow M&C
Saatchi into a global network. Subsequently we have declared our intention to
extend into higher margin and higher growth disciplines. This year is an
important one in realising both these goals.
We have a strong network of businesses across the world. This year, our
businesses in Continental Europe are forecast to exit the investment phase and
will make a profit contribution to the Group. Our business in the US has
stabilised with the focus of operations now based in LA. Trading in Asia and
Australia has been tougher, but will be a key management focus in the second
half. We now have a very compelling global client offering which is bolstering
our new business position.
Our strategy to move the business into attractive growth markets and higher
margin categories has progressed well in the first half. We have purchased an
additional 19.5% of Walker Media which takes our ownership to 94.5% and further
strengthens our position in this profitable marketplace. Additionally, we
announced the acquisition of Clear, which takes us into the attractive brand
consultancy market in the UK, US and Europe, an acquisition which will be
earnings enhancing in the first year of ownership.
UK
Revenue in the UK grew by 8.6%, driven by an excellent performance from Walker
Media and good new business wins elsewhere in the UK.
Reported operating margins declined by 0.8pts to 14.0% (2006: 14.8%), as a
result of a reduction in the recharge of central costs to other parts of the
Group and an increase in the cost of the LTIP scheme.
Key new accounts in UK advertising are Jamesons, which extends our relationship
with Pernod Ricard, Porsche, Abercrombie & Kent, Vodafone, CRM and additional
assignments from Heinz.
Walker Media continues to go from strength to strength under Phil Georgiadis'
chairmanship winning new business from Ladbrokes and Eurostar-St Pancras.
Additionally revenue growth has been driven by winning digital work from current
clients. Walker-i now accounts for 20% the Walker Media business.
The integration of Clear, the brand consultancy business we acquired in July
2007, is progressing very well. Clear is playing a crucial role in moving our
business into attractive higher margin business streams.
Europe
The turnaround in the financial contribution from the European business is
significant. Revenue has increased to £2.1m (2006: £0.5m) and contribution to
the Group's PBT has increased by £1.1m to £0.1m (2006: £(1.0)m ).
As reported, we acquired an initial 25% stake in Zapping (based in Madrid) in
March. We will acquire a further 26% in 2008 and 25% in 2009. The acquisition of
Zapping means that the Group now has a presence in the major markets in
Continental Europe. Also at an end is the significant investment in start up and
development costs incurred in 2005 and 2006.
Our French office (M&C Saatchi GAD) continued its excellent progress with very
significant new business wins from Pages Jaunes and Jamesons. They have also
opened a corporate PR business (Me&US) with foundation clients Veolia, EADS,
Ecole Polytechnique.
In July 2006 we acquired the majority of a small German agency based in Berlin,
therefore the 2007 interim results include a contribution for the first time.
They have had a positive first six months with important wins from the Green
Party of Germany and Coca Cola.
Asia and Australia
The first six months of 2006 has been difficult principally as a result of the
loss of IAG last year.
Revenue declined by 5.8% using constant currencies (7.9% at reported rates). The
operating loss increased to £(0.4)m (2006: £(0.1)m). We have started taking
actions to refocus and reorganise the business, and early signs such as an
account win from Abu Dhabi tourism and from Westfield, are encouraging.
After encouraging starts both Singapore and Thailand encountered tough trading.
Conversely Malaysia and New Zealand performed well in the first half, and the
outlook for these businesses is positive.
America
The reorganisation of the US operation is now complete, with the business run
out of LA. We incurred reorganisation costs of £(0.3)m in the first quarter but
the business delivered a positive contribution to operating profit of £0.1m
(2006: £(0.2)m ). Revenue increased by 35.6% using constant currencies (23.2% at
reported rates).
The office in LA continues to perform well with revenues up by 40% following a
good new business performance in the second half of 2006. Further activity in
New York will be managed on a break even-basis.
Outlook
It is encouraging that both our European and North American businesses have
moved into profit in the first half of the year. Additionally, the prospects for
our UK businesses are good, particularly in the higher margin businesses of
Clear and Walker Media. Whilst Asia and Australia has had setbacks, we are
currently undertaking an intensive review to re-energise the business.
The outlook for the rest of the year remains in line with current expectations
and we are confident of further significant progress in 2008.
This report comments on the unaudited consolidated income statement of M&C
Saatchi plc (the "Group") for the six months to 30 June 2007 compared with the
restated unaudited consolidated income statement for the same period in 2006.
The report also comments on the numbers before the impact of fair value
adjustments to minority shareholder put option liabilities and amortisation of
intangible assets (headline numbers).
The income statements for the six month period to 30 June 2006 and twelve months
to 31 December 2006 are the restated results under IFRS. Explanations of the
material restatements have been published prior to these results and can be
found at www.mcsaatchiplc.com.
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED INCOME STATEMENT
AT 30 JUNE 2007
Six months Six months Year ended
ended ended 31 December
30 June 2007 30 June 2006 2006
as restated as restated
Note £'000 £'000 £'000
Turnover (billings) 4 182,791 150,256 369,490
-------- -------- --------
Revenue 4 37,309 34,655 75,877
-------- -------- --------
Operating costs
- ordinary (34,108) (32,711) (69,217)
- share based payments (379) (188) (422)
-------- -------- --------
Total operating costs (34,487) (32,899) (69,639)
-------- -------- --------
Operating profit 4 2,822 1,756 6,238
-------- -------- --------
Share of results of associates 5 54 2 5
Finance income 964 676 1,540
Finance costs 6 (508) (398) (9,003)
-------- -------- --------
Profit / (loss) before taxation 4 3,332 2,036 (1,220)
-------- -------- --------
Taxation on profits 7 (1,215) (1,142) (2,852)
-------- -------- --------
Profit / (loss) for the
financial period 2,117 894 (4,072)
-------- -------- --------
Attributable to:
Equity holders of the Group 12 1,356 461 (5,220)
Minority interests 761 433 1,148
-------- -------- --------
2,117 894 (4,072)
-------- -------- --------
Earnings / (loss) per share 9
Basic 2.53p 0.85p (9.73)p
Diluted 2.50p 0.84p (9.73)p
Headline results
Operating profit 4 2,822 1,756 6,258
Profit before tax 4 3,850 2,420 7,770
Headline earnings per share 9
Basic 3.50p 1.56p 7.02p
Diluted 3.45p 1.55p 6.93p
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2007
Notes 30 June 2007 30 June 2006 31 December
as restated 2006
as restated
£'000 £'000 £'000
Non current assets
Intangible assets 13 15,486 14,715 15,357
Plant and equipment 3,541 3,275 3,531
Investments in associates 1,646 - -
Deferred tax assets 628 408 722
Other non current assets 518 368 460
-------- -------- --------
21,819 18,766 20,070
-------- -------- --------
Current assets
Work in progress 2,737 1,759 2,416
Trade and other
receivables 38,232 40,555 45,904
Current tax assets 421 98 88
Cash and cash equivalents 25,820 23,742 31,284
-------- -------- --------
67,210 66,154 79,692
-------- -------- --------
Current liabilities
Trade and other payables (52,577) (50,815) (63,430)
Current tax liabilities (537) (815) (1,036)
Provisions for put options (16,828) (6,821) (11,077)
-------- -------- --------
(69,942) (58,451) (75,543)
-------- -------- --------
Net current (liabilities)
/ assets (2,732) 7,703 4,149
Total assets less current
liabilities 19,087 26,469 24,219
Non current liabilities
Other non current liabilities (488) (587) (670)
Deferred tax liabilities (150) (182) (141)
Employment benefit provisions (506) (274) (221)
Provisions for put options (8,196) (6,782) (11,211)
-------- -------- --------
(9,340) (7,825) (12,243)
-------- -------- --------
Net assets 4 9,747 18,644 11,976
-------- -------- --------
Capital & reserves
Capital 11 24,301 24,916 24,124
Other reserves 11 (14,853) (12,765) (12,844)
Retained (loss) / earnings 12 (410) 5,553 (466)
-------- -------- --------
Total shareholders' equity 9,038 17,704 10,814
-------- -------- --------
Minority interest in equity 709 940 1,162
-------- -------- --------
Total equity 9,747 18,644 11,976
-------- -------- --------
M&C SAATCHI PLC
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
SIX MONTHS ENDED 30 JUNE 2007
Six months Six months Year
ended ended ended
30 June 2007 30 June 2006 31 December
as restated 2006
as restated
Notes £'000 £'000 £'000
Cash generated from operations 15 589 6,220 18,716
Tax paid (2,245) (1,123) (3,408)
-------- -------- --------
Net cash flow from operating
activities (1,656) 5,097 15,308
-------- -------- --------
Interest earned from cash held
by trading entities 707 446 1,085
Acquisitions and disposals 16 (1,542) - (635)
Proceeds from sale of plant and
equipment 20 - 16
Purchase of plant and equipment (738) (771) (1,707)
Purchase of capitalised software - (9) -
-------- -------- --------
Net cash from investing activities (1,553) (334) (1,241)
-------- -------- --------
Dividends paid (1,300) (965) (1,377)
Minority dividend paid (1,209) (468) (1,004)
Purchase of own shares - - (792)
Issue of own shares 3 - -
Repayment of finance leases (22) (55) (108)
Repayment of bank loans (6) - -
Interest received on centrally
held cash 257 230 455
Interest paid (5) (9) (20)
Interest on finance leases (3) (5) (13)
-------- -------- --------
Net cash from financing activities (2,285) (1,272) (2,859)
-------- -------- --------
Net (decrease) / increase in
cash and cash equivalents (5,494) 3,491 11,208
Cash and cash equivalents at
the beginning of the period 31,284 20,457 20,457
Effect of exchange rate changes 30 (206) (381)
-------- -------- --------
Cash and cash equivalents at
the end of the period 25,820 23,742 31,284
-------- -------- --------
M&C Saatchi plc
Notes to the interim statements
Six months ended 30 June 2007
1. Basis of preparation
The Company is a public limited company incorporated and domiciled in the UK.
The address of its registered office is 36 Golden Square, London W1F 9EE.
The Company has its primary listing on the AiM market of the London Stock
Exchange.
This condensed consolidated half-yearly financial information was approved for
issue on 24 September 2007.
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.
2. Basis of preparation
This condensed consolidated half-yearly financial information for the half-year
ended 30 June 2007 has been prepared in accordance with the AiM Rules for
companies. The half-yearly condensed consolidated financial report should be
read in conjunction with the annual financial statements for the year ended 31
December 2006 and statement on the impact of IFRS on the financial statements
issued on 21 September 2007.
The unaudited financial information presented in this document has been prepared
on the basis of the expected accounting policies which the Group will comply
with in the accounts to 31 December 2007 and on the basis of all International
Financial Reporting Standards ('IFRS'), including International Accounting
Standards ('IAS') and interpretations issued by the International Accounting
Standards Board ('IASB') and its committees, as adopted by the EU. These are
subject to ongoing amendment by the IASB and subsequent endorsement by the
European Commission and are therefore subject to possible change. As a result,
information contained within this release will require updating for any
subsequent amendment to IFRS required for first time adoption or those new
standards that the Group may elect to adopt early.
3. 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.
4. Segment 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 Six months Year
ended ended ended
30 June 2007 30 June 2006 31 December
2006
£'000 £'000 £'000
Turnover (billings)
UK 151,580 118,339 306,291
Asia and Australia 21,929 27,202 51,995
America 4,761 3,341 6,802
Europe 4,521 1,374 4,402
-------- -------- --------
182,791 150,256 369,490
-------- -------- --------
Revenue
UK 22,014 20,279 44,336
Asia and Australia 11,306 12,281 25,638
America 1,917 1,555 3,632
Europe 2,072 540 2,271
-------- -------- --------
37,309 34,655 75,877
-------- -------- --------
Headline operating profit / (loss)
UK 3,077 3,007 6,307
Asia and Australia (360) (57) 1,496
America 58 (239) (261)
Europe 47 (955) (1,284)
-------- -------- --------
2,822 1,756 6,258
-------- -------- --------
Reconciliation to IFRS GAAP reported operating profit and loss
Amortisation of intangible
assets
Europe - - (20)
-------- -------- --------
Reported operating profit 2,822 1,756 6,238
-------- -------- --------
4. Segment information (continued)
Six months Six months Year
ended ended ended
30 June 2007 30 June 2006 31 December
2006
£'000 £'000 £'000
Headline profit / (loss) before tax
UK 3,972 3,620 7,767
Asia and Australia (348) (3) 1,558
America 61 (235) (254)
Europe 165 (962) (1,301)
-------- -------- --------
3,850 2,420 7,770
-------- -------- --------
Reconciliation to IFRS GAAP reported profit before tax
Fair value adjustments to
minority shareholder put
option liabilities
UK (501) (384) (8,970)
Amortisation of intangible
assets
Europe (17) - (20)
-------- -------- --------
Reported profit
before tax 3,332 2,036 (1,220)
-------- -------- --------
Net assets / (liabilities)
UK 12,218 21,391 14,097
Asia and Australia 2,698 2,616 3,095
America (3,177) (3,377) (3,032)
Europe (1,992) (1,986) (2,184)
-------- -------- --------
9,747 18,644 11,976
-------- -------- --------
5. Share of results of associates
Six months Six months Year
ended ended ended
30 June 2007 30 June 2006 31 December
2006
£'000 £'000 £'000
Share of result from associates
Share of profit before taxation 132 2 7
Amortisation recognised on
acquisition of associate (17) - -
Share of taxation (61) - (2)
-------- -------- --------
Total 54 2 5
-------- -------- --------
6. Finance costs
Six months Six months Year
ended ended ended
30 June 2007 30 June 2006 31 December
2006
£'000 £'000 £'000
Finance costs
Bank interest chargeable (7) (14) (33)
Fair value adjustments to
minority shareholder put
option liabilities (501) (384) (8,970)
-------- -------- --------
Total (508) (398) (9,003)
-------- -------- --------
7. Taxation
The effective annual tax rate for the period to 30 June 2007 is 36.5% (30 June
2006 56.1%).
The headline average annual tax rate used for the period to 30 June 2007 is
31.7% (the estimated headline tax rate for the first-half to 30 June 2006 was
47.2%). This decrease is mainly due to a reduction in entities reporting tax
losses with no associated tax credit.
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
A dividend of £1,300k was paid in June 2007. The dividend relates to the period
to 31 December 2006.
In addition, the directors propose an interim dividend of 0.87 pence per share
(2006: 0.77 pence per share) payable on 24 October 2007 to shareholders who are
on the register at 5 October 2007. This interim dividend, amounting to £513k
(2006: £412k) has not been recognised as a liability in this half-yearly
financial report.
9. Earnings per share
Six months Six months Year
ended ended ended
30 June 2007 30 June 2006 31 December
2006
Reported earnings / (loss) per share
Basic 2.53p 0.85p (9.73)p
Diluted 2.50p 0.84p (9.73)p
Diluted
Profit / (loss) for the period,
attributable to equity shareholders 1,356 461 (5,220)
Weighted average number of shares 54,244,749 54,644,954 54,347,216
--------- ---------- ---------
Earnings / (loss) per share 2.50p 0.84p (9.73)p*
--------- ---------- ---------
Basic
Profit / (loss) for the period,
attributable to equity shareholders 1,356 461 (5,220)
Weighted average number of shares 53,576,549 54,206,799 53,677,484
-------- --------- --------
Earnings / (loss) per share 2.53p 0.85p (9.73)p
-------- --------- --------
Headline earnings per share
Basic 3.50p 1.56p 7.02p
Diluted 3.45p 1.55p 6.93p
Diluted
Headline retained earnings 1,874 845 3,770
Weighted average number of shares 54,244,749 54,644,954 54,347,216
--------- ---------- ---------
Earnings per share 3.45p 1.55p 6.93p
--------- ---------- ---------
Basic
Profit / (loss) for the period,
attributable to equity shareholders 1,356 461 (5,220)
Fair value adjustments to minority
shareholder put option liabilities 501 384 8,970
Amortisation of intangibles 17 - 20
--------- ---------- ---------
Headline profit, for the period
attributable to equity shareholders 1,874 845 3,770
--------- ---------- ---------
Weighted average number of shares 53,576,549 54,206,799 53,677,484
--------- ---------- ---------
Earnings per share 3.50p 1.56p 7.02p
--------- ---------- ---------
* Diluted loss per share is reported equal to the basic loss per share. Diluted
loss per share is not reported as it is arithmetically greater than the basic
loss per share figure.
10. Cash and cash equivalents
Six months Six months Year
ended ended ended
30 June 2007 30 June 2006 31 December
2006
£'000 £'000 £'000
Cash and cash equivalents
Cash held in hand and at bank 25,820 23,742 31,312
Overdraft - - (28)
--------- ---------- ---------
25,820 23,742 31,284
--------- ---------- ---------
11. Capital and other reserves
Six months Six months Year
ended ended ended
30 June 2007 30 June 2006 31 December
2006
£'000 £'000 £'000
Capital
Ordinary share capital 543 542 542
Share premium 9,794 9,618 9,618
Merger reserve 14,756 14,756 14,756
Treasury reserve (792) - (792)
--------- ---------- ---------
Total 24,301 24,916 24,124
--------- ---------- ---------
Other reserves
Share option reserve 1,002 718 845
Put option reserve (15,595) (13,219) (13,318)
Foreign exchange reserve (260) (264) (371)
--------- ---------- ---------
Total (14,853) (12,765) (12,844)
--------- ---------- ---------
12. Consolidated statement of changes in equity
Note Capital Other reserves Retained earnings Total
£000s £000s £000s £000s
--------- --------- ------- --------
Balance at 31
December 2006 24,124 (12,844) (466) 10,814
--------- --------- ------- --------
Currency translation
differences - 111 - 111
Profit for the period - - 1,356 1,356
--------- --------- ------- --------
Total recognised
income and expenses - 111 1,356 1,467
--------- --------- ------- --------
Issue of shares 177 - - 177
Non cash share
based incentive plans - 190 - 190
New put options
issued - (2,310) - (2,310)
Dividends - - (1,300) (1,300)
--------- --------- ------- --------
Balance at 30
June 2007 24,301 (14,853) (410) 9,038
--------- --------- ------- --------
13. Intangibles
Six months Six months Year
ended ended ended
30 June 2007 30 June 2006 31 December
2006
£'000 £'000 £'000
Goodwill 15,394 14,627 15,270
Other intangibles 92 88 87
-------- --------- --------
Intanibles 15,486 14,715 15,357
-------- --------- --------
Other intangibles consist entirely of capitalised software costs.
14. Acquistion of associate
On the 8 March 2007 the Group acquired 25% of Zapping Publicidad, S.A and its
group of companies, a Spanish marketing services group, with a commitment to
acquire a further 50% over the next three years.
Purchase consideration £000
Cash paid 1,349
Direct costs relating to the acquisition 193
--------
Total purchase consideration 1,542
--------
Intangible assets acquired 88
Net assets acquired 35
--------
Goodwill 1,419
--------
The goodwill is attributable to the company's award winning creative talent.
15. Cash generated from operations
Six months Six months Year
ended ended ended
30 June 2007 30 June 2006 31 December
2006
Notes £'000 £'000 £'000
Revenue 37,309 34,655 75,877
Operating expenses (34,487) (32,899) (69,639)
-------- -------- --------
Operating Profit 2,822 1,756 6,238
Adjustments for:
Depreciation of plant and
equipment 759 578 1,212
Losses on sale of plant and
equipment 9 1 5
Amortisation of intangible
assets - - 20
Non-cash share based incentive
plans 190 119 213
-------- -------- --------
Operating cash flow before
movements in working capital
and provisions 3,780 2,454 7,688
-------- -------- --------
(Increase)/decrease in work in
progress (309) 1,403 712
Decrease in trade and other
receivables 7,864 9,255 3,434
(Decrease) / increase in trade
and other payables (10,850) (7,044) 6,416
Increase in provisions 104 152 466
-------- -------- --------
Net cash inflow from operating
activities 589 6,220 18,716
-------- -------- --------
16. Cash consumed by acquisitions
Acquisitions £'000 £'000 £'000
Initial cash consideration - - (749)
Cash and cash equivalents acquired - - 114
Purchase of associate (Zapping, Spain) (1,542) - -
-------- -------- --------
Total (1,542) - (635)
-------- -------- --------
17. Capital Commitments
The only significant capital commitment is our agreement to acquire a further
50% of Zapping Publicidad, S.A and its group over the next three years.
18. Events occurring post balance sheet date
On the 3 July 2007 we acquired an additional 19.5% of the issued ordinary shares
of Walker Media Holdings Limited (Walker Media) for an initial consideration of
£11.8 million. The consideration will be adjusted following the determination of
the consolidated profit for Walker Media for the financial year ending 31
December 2007. After the acquisition M&C Saatchi will hold 94.5% of the total
issued share capital of Walker Media.
On the 5 July 2007 we acquired 100% of the total issued share capital of Clear
Ideas Limited (Clear) for an initial consideration of £18.4 million. There is an
earn out based on Clear's results to 31 March 2011.
This information is provided by RNS
The company news service from the London Stock Exchange